Mortgage originations sunk to a four-year low in 2018, according to the Federal Reserve Bank of New York’s quarterly household debt report released Tuesday.

In Q4 2018, originations clocked in at $401 billion — the lowest level seen since the fourth quarter of 2014 ($278 billion).  Meanwhile, mortgage balances on consumer credit reports remained unchanged at $9.1 trillion, and balances on home equity lines of credit (HELOC) slid to $412 billion — a $10 billion decline from the previous quarter.

Mortgage delinquencies remained flat at 1.1 percent with only 14.8 percent of early delinquency mortgages (30 to 60 days) transitioning to serious delinquency (90+ days).

Although mortgage originations took a major hit in 2019, Freddie Mac’s latest report signals that a turnaround may be on the horizon as mortgage rates drop in response to the Fed’s decision to interest rate hikes on hold, thanks to a strong economy.

“The combination of cooling inflation and slower global economic growth led mortgage rates to drift down to the lowest levels in a year,” said Freddie Mac of the results.

“While housing activity has clearly softened over the last nine months and the lingering effects of higher rates from last year are still being felt, lower mortgage rates and a strong job market should rekindle demand for the spring home-buying season.”

As of Feb. 14, a 30-year fixed-rate mortgage averaged 4.37 percent, down from last week when it averaged 4.41 percent. A 15-year fixed-rate mortgage averaged 3.81 percent, down from last week’s 3.84 percent. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.88 percent, down from last week’s 3.91 percent.

Realtor.com chief economist Danielle Hale says the positive impact of lower mortgage rates won’t be immediate, but the spring home-buying season should lift slumping sales.

“In fact, this week we saw rates fall to 4.37 percent, just below where they were last year, welcome news for buyers who are also benefiting from more homes on the market,” Hale said in an emailed statement.

“Although a reduction in rates may not translate into more sales right away, paired with more inventory we should eventually see a lift.”

Email Marian McPherson.

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