Conventional-conforming mortgages led the fourth-quarter increase in new first-lien originations, according to a new Inside Mortgage Finance ranking and analysis.

An estimated $452.0 billion of conventional-conforming loans were produced in the fourth quarter of 2019, a 9.2% increase from the previous period. That marked the highest output for such loans since the third quarter of 2003, the peak of the strongest mortgage market on record, when conventional-conforming production weighed in at a staggering $776.0 billion.

Government-insured lending wasn’t far behind. An estimated $165.0 billion of government loans were originated in the fourth quarter, up 8.6% from the prior period.

Both the conventional-conforming and government sectors benefit from a huge increase in refinance lending. Early estimates point to a 31.4% increase in refi originations that offset a sharp 13.3% drop in purchase-mortgage lending.

The swing from purchase to refinance might have been more severe than that. Securitization of newly originated purchase loans by Fannie Mae, Freddie Mac and Ginnie Mae fell 17.7% from the third to the fourth quarter, while agency refi business surged 53.6% higher.

Non-agency loan originations were up as well. Jumbo mortgage production rose a modest 1.7% from the third quarter to an estimated $122.0 billion – the highest volume since the final lap of 2006.

And the expanded-credit mortgage sector continued to gain ground. Originations of loans that fall outside the qualified mortgage boundary – along with other nontraditional products – rose to nearly $16.0 billion.

ECM production grew by only 17.0% last year, while overall first-lien originations rocketed up 45.7% over 2018 levels. The conventional wisdom has been that non-QM lending will start to gain traction when mainstream lenders face a severe drop in production and look around for new opportunities.

Total originations fell in 2017 and 2018 but apparently not enough to attract attention from top lenders. And then the boom of 2019 drowned out interest in niche markets.

There wasn’t a lot of movement among the top producers of conventional-conforming and government loans during the fourth quarter.

Wells Fargo reported a solid 8.2% increase in its conventional-conforming business and ranked as the top lender in the sector by a fairly wide margin. Quicken Loans likely made up some ground, although the company doesn’t report conventional-conforming production figures.

A handful of top lenders in the sector reported declining volume in the fourth quarter, including AmeriHome Mortgage, Fairway Independent Mortgage, Guaranteed Rate and Guild Mortgage.

PennyMac was tops in government lending with an estimated $55.81 billion in year-to-date production, largely through correspondents. Freedom Mortgage and Quicken, ranking second and third, both reported hefty increases in the fourth quarter.

Wells Fargo, Guild Mortgage and U.S. Bank all reported declining government production in the fourth quarter.