This ARTICLE On Mortgage Refinance Increase 15% Due To Mortgage Rate Drop Was PUBLISHED On August 12th, 2019
- On the flipside, Mortgage Rates hit the highest levels in 2018 since the 2008 Great Recession And Housing Crash
- The Federal Reserve Board (The Fed) increased interest rates four times in 2018
- Many borrowers who closed on their home loans in 2018 got hit with the highest rates since the 2008 Real Estate Market Crash
- Since the beginning of the year, mortgage rates have been dropping to its lowest levels in three-years
- This is mainly due to the Federal Reserve Board taking an opposite stance of its 2018 rate increases
- The Federal Reserve Board recently cut interest rates by 25 basis points
- This interest rate cut by the Feds was the first time since the 2008 Recession
- Mortgage Refinance Increase by more than 15% due to the consistent mortgage rate drop
In this article, we will cover and discuss Mortgage Refinance Increase Numbers due to mortgage rate drop.
Low Rates Is The Cause Of Mortgage Refinance Increase
Michael Gracz, the national sales manager at Gustan Cho Associates, is swamped with refinance borrowers. Here is what Mike Gracz says about the reason for Mortgage Refinance Increase in his team:
Homeowners rushed to take advantage of a sizable drop in mortgage interest rates last week, but potential buyers were unimpressed. Total mortgage application volume rose 5.3% from the previous week, according to data of the seasonally adjusted index. Volume was 46.5% higher than a year ago when rates were significantly higher. Refinances drove the volume, rising 12% for the week and a stunning 116% from one year ago. Refinances are highly sensitive to even small interest rate moves, and last week was significant. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.01% from 4.08%, with points increasing to 0.37 from 0.34 (including the origination fee) for loans with a 20% down payment. That rate was 83 basis points higher one year ago. The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the development that a trade war with China has started. The result was a sharp drop in mortgage rates, which will likely draw many refinance borrowers into the market in the coming weeks. The 30-year fixed rate mortgage fell to its lowest level since November 2016. We fully expect that refinance volume will jump even higher this week given the further drop in rates.
FHA And VA Streamline Refinances
Anyone borrower who closed their home loans last year at 5.0% or higher can take advantage of today’s low mortgage rates by refinancing. Borrowers with a current FHA and/or VA Loan can take advantage of the FHA and VA Streamline Refinance Program. There is no appraisal required and no income documentation on streamlines. Most streamlines can be closed in two to three weeks.
How About Purchases
Purchase business was not affected by any increases due to decreasing mortgage rates. Home inventory remains low but demand remains strong. Both HUD and the Federal Housing Finance Agency (FHFA) have increased FHA and Conventional Loan Limits for three years in a row due to rising home prices. 2019 FHA Loan Limits is capped at $314,827. 2019 Conforming Loan Limits is now capped at $484,350. High-Cost Areas like many counties in California have higher FHA and Conforming Loan Limits. The Department of Veterans Affairs (The VA) recently lifted VA Loan Limits. There are no maximum loan limits on VA Loans.
Here is what Mike says:
Mortgage applications to purchase a home got no boost from those lower rates. They fell 2% for the week, the fourth straight decrease. Purchase volume was still 7% higher than a year ago. Ironically, buyers may be souring on the housing market because of the reasons behind the interest rate drop, namely concern over the durability of the U.S. economy. An escalating trade war with China is rattling equity markets as well as shaking consumer confidence. For most Americans, a home is their single largest investment, and as such purchasing one is a highly emotional decision. If potential buyers don’t feel good about their financial futures, even low mortgage rates may not get them off the fence and into a home of their own.
Home prices are continuing to climb despite high home prices. Inventory of homes still remain low in many states. For more information about the content of this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org.