Refinancing has been such a major factor in the mortgage industry this past year. With mortgage rates low and home prices high, it’s the perfect situation for homeowners to refinance their mortgage loans.
Most recently, we’ve seen the effects of the coronavirus in the financial markets. It has hurt the stock market, but actually pushed mortgage rates to 3-year lows. As a result, there has been a mini refinance boom in recent weeks. Homeowners are taking advantage of the historically low rates.”
By the Numbers
This past week, we’ve seen the total mortgage application volume increase by 1.1% over the previous week. Refinancing led the charge with a 5% increase last week. When compared to the same week one year ago, refinance demand was up an astounding 207%!
The fears of the coronavirus started dropping rates about a month ago, and it’s hard to say how long they will stay so low. If fears of the epidemic get worse, then mortgage rates may go down even further. If they start to calm down—which seems to be the case based on how Chinese markets are shifting back toward normal—then the rates will likely start to rise again. The refinance boom was a bit unexpected (as was the coronavirus outbreak itself), but it’s not at all surprising given the current market conditions.
“The mortgage market continues to be active in early 2020, as applications increased for the third straight week,” says Joel Kan, an economist with the Mortgage Bankers Association. “The refinance index climbed to its highest level since June 2013, and refinance loan sizes also increased as a result of an active jumbo lending market.”
Time to Explore Refinancing Options
It’s an interesting real estate market right now. The rates are low, but so is the housing inventory. Many buyers are still staying on the sidelines with a lack of affordable housing available. Meanwhile, homeowners are content to stay in their homes that continue to gain equity, especially when they are able to refinance at lower interest rates and/or shorter loan terms. Others are utilizing their equity for home improvement projects through home equity lines of credit (HELOCs) and cash-out equity refinances.
Amidst the horrific spread and slow containment of the coronavirus, it has created this perfect little window for home refinancing to experience a sharp spike upward. It doesn’t appear like it will last too much longer, but only time will tell. If you are on the fence about refinancing your home loan, now is the time to take action. You likely won’t see better conditions than this for awhile, so it’s a good opportunity while it lasts.