03/16/2020
Are you a homeowner and need to kill a few minutes in quarantine 😂? Read the below.
The news is out 👨💼 There is a serious (rightfully so) global concern about the spread of COVID-19 🦠, some countries in Europe are partially shutting down borders 🚧, schools are closing 🚫, employers have transitioned employees to working from home 👨🏻💻👩🏼💻, stocks are looking at their worst month since 1987 📉, and the Fed has cut ✂️ the fed funds rate to near zero. While much of this has caused global fear, panic and concern about what is to come in the following weeks and months, there has also been a growing interest from existing homeowners to refinance their mortgage. As a mortgage professional, I feel it is important to provide some information around what to expect.
Yes, the Fed cut the federal funds rate but that on it's own does not mean mortgage rates will fall. There are a host of factors that go into where mortgage rates will move; the big players being inflation, the level of economic growth, the Federal Reserve's monetary policy, the bond market and mortgage backed securities, housing market conditions, as well as, the basic rules of supply and demand.
As for refinance rates specifically, right now as a whole the industry is actually seeing a spike in refinance rates. This is due in large part to supply and demand factors. With growing interest in refinances, coupled with the high level of new purchase mortgages being done, lenders across the county are facings funding capacity constraints. As such, many banks are focusing more of purchase business by maintaining rates that are attractive for homebuyers and also processes to ensure purchase transactions are handled efficiently for home buyers and our realtor partners. The result is refinance transactions are being given the middle child treatment within the mortgage family.
Final Thoughts: at loanDepot, we have taken the steps necessary to ensure both a smooth purchase transaction or refinance. We value your business and understand the importance of recognizing your needs as an existing homeowner. Keep in mind, your interest rate alone may not be the only determinate on why a refinance makes sense; maybe you need cash to handle debts or you are eligible to remove your PMI (mortgage insurance) from your payment. Rates are still low and now is still a great time to look into a refinance. I would recommend speaking with your mortgage lender (if you're still reading this hopefully me 🤣) about what you're homeownership goals are and what to expect in the coming weeks and months.
