Is The Refinance Boom Over?

Home Mortgage Refinance

Is Refinance Boom Over?

Many homeowners still have higher mortgage rates and have been waiting to refinance their mortgage loans hoping that the mortgage rates will drop below the 3.0% mark.  Others still have mortgage loan balances that are higher than the value of their homes and did not take advantgage of the Home Affordable Refinance Program ( HARP ) because they felt that mortgage rates were going to drop even more.  Those who had mortgage rates at 5.0% or higher and took advantage of refinancing their mortgage loans when mortgage rates were in the 3.0% range are now smiling.  Others who have been on the sidelines have recently witnessed mortgage rates sky rocket from 3.25% to almost 5.0% in period of weeks.  There are millions of homeowners who have started their home refinance process a few months ago and did not lock their rates who cannot refinance now because mortgage rates have spiked up so quickly in such a short period of time.  Those homeowners are out of their appraisal fees and are just left hanging praying for mortgage rates to drop.

Mortgage rates blast off for 10 consecutive weeks

Mortgage rates have been holding steady for almost a year until May of this year where it starting to take off week after week.  FHA mortgage rates were consistently at 3.25% for a 30 year FHA mortgage loan and conventional mortgage rates were consistently at 3.625% until May of this year.  Starting in May, both FHA mortgage rates and conventional mortgage rates were steadily rising week after week.  Those homeowners who had started the refinance process but did not lock their mortgage loans, were hoping week after week that mortgage rates drop so they can lock their mortgage rate.  However, mortgage rates did not retract and they just kept on flying north with no mercy.  To top it off, Federal Reserve Board Chairman Ben Bernanke announced that the Feds will stop the bond buying program and that higher interest rates will be good for the economy.  This announcement took mortgage rates higher.

Jumbo Mortgage Rates

A real case study here is I was quoting Jumbo mortgage rates at 4.25% just several weeks ago.  Jumbo mortgage rates today is north of 5.5% and some Jumbo mortgage lenders are quoting Jumbo mortgage rates north of 6.0%.   Earlier this year, Jumbo mortgage rates were as low as 3.875%.  I also specialize in Condotel mortgage loans.  Condotel mortgage rates were at 4.875% earlier this year.  Today’s condotel mortgage rates are at 5.5% for owner occupied condotels and 5.75% for second home condotels and vacation home condotels and 6.0% for investment condotel mortgage loans.

Home Affordable Refinance Program ( HARP 3.0 )

The Home Affordable Refinance Program 3.0, also known as the HARP 3.0, is a government program that will let a homeowner who has mortgage loan balances that is higher than the value of their home the ability to refinance their homes with no appraisal required.  There is the HARP program, the HARP 2.0 program, and the HARP 3.0 program that is suppose to be launched this year.  Most folks who took advantage of the HARP programs were those who have mortgage rates higher than 5.0%.  However, if the government launches the HARP 3.0 program this year, it would be a moot point if mortgage rates stay where they are at currently.  The HARP program will only be beneficial if and only if mortgage rates drop again.

The halt of the refinance boom have devastated many mortgage loan originators and mortgage companies

The sudden sharp increase in mortgage rates have also devastated many mortgage loan originators and mortgage companies who specialize in the refinance mortgage end of the market.  Many mortgage loan originators had dozens of refinance mortgage loan clients in the pipeline but did not lock their loans.  Do to the massive increase in mortgage rates, it did not make any sense for any of those refinance clients to go through with the refinance.  If a loan does not close, mortgage loan originators do not get paid and the mortgage company does not make any money.  This was the case to thousands throughout the country.  I know of a particular local mortgage company that might end up shutting down due to the sudden increase in mortgage rates because over half their mortgage loan originators have lost almost all of their deals in their pipeline due to cancellations.

Related> 2015 Refinance Mortgage Lending Guidelines

Related> Refinance FAQ

Related> Conventional Refinance Mortgage

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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