16 Jan 09 Mortgage Refinancing Activity Skyrockets
In a recent USA Today article, Stephanie Armour examines the home refinancing rush, as ecord low mortgage rates have spurred a surge in homeowners wanting to refinance. According to a report from Mortgage Bankers Association, over 85% of new mortgage activity involved refinancing applications.
Mortgage lenders are swamped by the giant wave of mortgage refinancing requests. Many have shed staff the past couple of years as the housing market slumped. Now they lack the manpower to quickly process refinancing requests. “Lenders aren’t prepared for the surge,” says Mark Zandi of Moody’s Economy.com. Some lenders are even hiring more people to accommodate the growing demand for refinancing.
In a normal market, refinance loans take 50% to 60% of its business. Many anticipate the refinancing boom to continue at a rapid pace.”The refinancing wave could become very large,” Zandi says. “There are millions of people with some equity and good credit scores who are now saying, ‘Let’s refinance.’ Home refinancing will increase substantially.” Many people can’t take advantage of the lower rates. Among them are millions whose houses have declined so much in value that the homeowners owe more money than their homes are worth. Ken Schimpf, 61, a retired carpenter in Lancaster, California, bought his home for $330,000. With similar homes in his area now going for about $240,000, he can’t refinance to get a lower interest rate.”It’s a lost cause,” Schimpf says. “It’s very frustrating. Most reports indicate that not many borrowers have qualified for Hope for Homeowner, which is FHA’s new loan program that enables borrowers who have no equity to still qualify for a refinance loan.
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Tags: lower interest rate, mortgage lender, mortgage rates, mortgage refinancing, refinance
