VA Streamline Refinance Guidelines

Is Refinance Boom Over For Homeowners Due To Mortgage Rates

Gustan Cho Associates are mortgage brokers licensed in 48 states

This article on Is Refinance Boom Over For Homeowners Due To Mortgage Rates

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 4.0% mark.

Others still have mortgage loan balances that are higher than the value of their homes and did not take advantage of the Home Affordable Refinance Program ( HARP ). This is 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 back in 2013 when mortgage rates were in the 3.0% range are now smiling. Others who have been on the sidelines. They have witnessed mortgage rates skyrocket from 4.0% to over 5.0% in 2018 in a matter of a few months. There are millions of homeowners who have started their home refinance process a few years ago and did not lock their rates who cannot refinance now. This is because mortgage rates have spiked up so quickly in such a short period of time in 2018. Those homeowners were out of their appraisal fees and are just left hanging praying for mortgage rates to drop. Mortgage rates have been dropping since the start of 2019. Rates are expected to further drop in 2019.

Federal Reserve Board Chairman Jerome Powell recently announced the FED will be lowering interest rates in the coming weeks due to concerns of tariff wars and another recession.

Mortgage rates blast off for 10 consecutive weeks

Mortgage rates blast off for 10 consecutive weeks

Mortgage rates have been steadily dropping since the start of 2019.

  • FHA mortgage rates were consistently at 4.25% for a 30 year FHA mortgage loan.
  • Conventional mortgage rates were consistently at 4.625% until May of this year.
  • Starting in May, both FHA and conventional mortgage 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 rate.
  • However, mortgage rates did not retract.
  • They just kept on flying north due to good economic news.
  • To top it off, Federal Reserve Board Chairman Jerome Powell 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.

The hike in rates hopefully is a temporary increase. Many industry experts expect mortgage rates to drop in the coming weeks.

Jumbo Mortgage Rates

A real case study here is I was quoting Jumbo mortgage rates at 5.25% just several weeks ago.  Jumbo mortgage rates today is north of 4.75%

  • Some Jumbo lenders are quoting Jumbo mortgage rates north of 6.0% a few months ago
  • Earlier this year, Jumbo mortgage rates were as low as 4.875%
  • I also specialize in Condotel mortgage loans
  • Condotel mortgage rates were at 5.875% earlier this year
  • Today’s condotel mortgage rates are at 5.5% for owner-occupied condotels
  • 5.75% for second home condotels and vacation home condotels
  • 6.25% for investment condotel mortgage loans

Is Refinance Boom Over With Home Affordable Refinance Program Being Discontinued?

The Home Affordable Refinance Program 3.0, also known as the HARP 2.0, is a government program that will let a homeowner who has 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 and the HARP 2.0 program that has now been discontinued. 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, 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.

Is Refinance Boom Over For Mortgage Brokers?

The sudden sharp increase in mortgage rates in 2018 has also devastated many smaller mom and pop mortgage brokers who specialize in the refinance mortgage end of the market.  Many mortgage loan originators had dozens of refinance clients in the pipeline but did not lock their loans.  Due to the massive increase in mortgage rates in 2018, 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. The mortgage company does not make any money.  This was the case for 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> Refinance Mortgage Lending Guidelines

Related> Refinance FAQ

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