On June 22, 2015 I wrote that some big lenders experienced 40%+ increases in refi mortgages for the 1st quarter 2015 compared to the same period in 2014.
Today, the headline reads “refis plunge as rates rise above 4%.” Banks are now shifting to borrowers who want to buy homes – a lukewarm market. Ever since the 2008 Great Recession, small rate variations have sent the mortgage markets gyrating as borrowers jump in to take advantage of the cheaper financing. But when rates rise, lenders assume that the refi market has topped out, and those borrowers who were able to refi have done so. Consequently, few people will choose to refi moving forward as rates rise.
Bank of America, for example, had 2/3 of their 2nd quarter mortgage business as refis. As this business dries up, the bank plans to emphasize home-equity lines of credit, where B of A finds itself #1 in the industry. Other lenders will probably follow suit.
As always, one of the messages here is aimed directly at our industry. If it remains difficult for many would be borrowers to obtain a money purchase loan from a lender, you as a seller can step in and take the place of that lender. Have your realtor – or yourself – find a buyer who will want to make your property their home. Negotiate terms that are fair and firm for both of you.
Help the real estate market.
Sources: Mortgage Bankers Association and Moody’s Analytics.