Last week, the jobs report was lackluster, mortgage rates posted their biggest drop of the year, and data showed a surge in refinancing demand.
While this may seem like good news for loan originators, their refinance operations have been suffering from declining profits for two years, LO said. house line.
“Last week, I was going through my newsletter with real estate agents and telling them to pay attention to the headlines,” said senior loan originator Geoff Black. guild mortgage. “It (refi application volume) is meaningful, but is it meaningful at a macro level? Absolutely not.
“We did it five times with the Alabama team [refis] this summer. Three were done in the Tampa Bay area of Florida. Tennessee did two,” Southeast region manager Troy Borkowski said. American Financial Network. “There’s been some refinancing starting to come in, but interest rates haven’t really affected anything.”
Fannie Mae The report said that in the week ended August 9, refinancing applications increased by 32.8% from the previous week, while total mortgage loan locks increased by 22.5% month-on-month. best blue.
“Purchase lock volume increased 12.3% during this period, while volume growth was led by a 63.5% surge in refinance locks. An increase in borrowers seeking rate and term refinancing gave this loan type the largest share of refinance volume share increased from 42% to 63%,” said Jim Glennon, vice president of hedging and trading at Optimal Blue.
Still, data from Optimal Blue shows that refinancing activity only accounts for 17% of total locks.
Glennon added: “Today’s refinancing activity is well below levels seen during the COVID-19 refinancing boom of 2020 and 2021. At the peak of the boom, refinancings accounted for 60% of lockdown activity, compared to just 25% now.” .
Kea Blevins, Senior Mortgage Loan Officer atlantic bay mortgage groupShe’s seen an uptick in interest in refinancing among her clients, but many are taking a “wait and see” approach as interest rates remain volatile.
The main group of people refinancing are those who have locked in interest rates above 7% from fall 2022 through this spring. This small group of homeowners includes those looking to withdraw cash from their accumulated equity.
“Some homeowners are taking out cash to upgrade their homes because real estate is often your largest asset,” Blevins said. “As home prices have appreciated, especially over the past two, three, four years Here, you might meet someone who may have only lived in the house for two years but has now built up enough equity that they can use for renewal or debt consolidation just to give themselves some breathing room and their budget because we are all experiencing an increase in the cost of living.
In early August, conventional mortgage rates fell into the low 5s and low 6s after a jobs report showed a spike in unemployment. But rates climbed later this week. The average interest rate on a 30-year conforming loan on Friday was 6.65% house lineMortgage Rate Center.
Most credit officers are optimistic about a refinancing boom as rates drop into the 5% range, given that about 88% of Fannie Mae’s single-family mortgage borrowers have note rates below 6%. But the surge in house prices hoped for by promoters may not be the same as in 2020 and 2021, as house prices will challenge buyers.
“There may be a window for buyers to refinance in the coming months. [presidential] Interest rates are lower around elections and at the end of the year. But I think that’s probably short-lived because then housing prices will go up,” Borkoski said.
