The second quarter saw the largest quarterly origination volume in the past 20 years, according to data firm Black Knight Inc. Mortgage activity has also shown signs that some of spring homebuying hampered by the pandemic has moved into the third quarter.

Nearly $1.1 trillion in first lien mortgages were originated nationwide in the second quarter, the largest quarterly volume since Black Knight began reporting on it in January 2000.

Ben Graboske, president of Black Knight’s data and analytics division, said in a statement that record-low interest rates have provided a “backstop to the impact of shutdowns, unemployment and economic uncertainty.”

“Despite the nation being under pandemic-related lockdowns for much of the quarter, a record-breaking surge in mortgage originations occurred in Q2 2020, driven by the record-low interest rate environment,” Graboske said.

Refinance activity represented nearly 70 percent of second quarter originations by dollar value, increasing more than 60 percent from the previous quarter and more than 200 percent compared to the same period last year.

Purchase lending declined 8 percent year-over-year, reflecting the impact of COVID-19 on the traditional spring homebuying season, Graboske said. He added that mortgage loan rate lock data – a leading indicator of lending activity – suggests that the homebuying season was pushed into the third quarter.

“Purchase locks in Q3 2020 have already made up for the losses of a COVID-impacted Q2 – and then some – based upon normal seasonal expectations,” Graboske said. “In fact, rate locks are suggesting that we could see Q3 purchase lending break typical seasonal trends and rise by 30-40 percent, which would push us to a new record high.”

He added that refinancing lock data also point to third quarter increases. Assuming a 45-day lock-to-close timeline, Graboske said, refinance loans expected to close in the third quarter are up 20 percent compared to the second quarter.

“With market conditions as they are and given the recent delay of the 50 basis points fee on GSE refinances until December, we would expect near-record low interest rates to continue to buoy the market,” Graboske said. “After all, there are still nearly 18 million homeowners with good credit and at least 20 percent equity who stand to cut at least 0.75 percent off their current first lien rate by refinancing.”

Strong summer activity was also reflected in the Mortgage Bankers Association most recent weekly survey, which saw increases for both purchase and refinance applications.

Mortgage applications increased 2.9 percent from one week earlier, according to the MBA’s Weekly Mortgage Applications Survey for the week ending Sept. 4.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The Refinance Index increased 3 percent from the previous week and was 60 percent higher than the same week one year ago, which included Labor Day.

The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 0.2 percent compared to the previous week and was 40 percent higher than the same week one year ago.

“Mortgage rates declined last week, with a noteworthy 5-basis-point decrease in the 15-year fixed rate to a new record low of 2.62 percent. The drop in rates led to a rebound in refinancing activity, driven mainly by borrowers applying for conventional loans,” Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Purchase applications were 40 percent higher than the same week last year, but the increase is skewed higher by being compared to Labor Day 2019. Nevertheless, there continues to be resiliency in the purchase market. Applications were up almost 3 percent on a weekly basis and the average loan size continued to increase, hitting a survey high at $368,600.”

Kan added that increases in conventional, VA and FHA purchase applications highlighted strong overall demand for buying a home.