Low mortgage interest rates have resulted in mortgage applications surging recently; however, a CNBC report indicates that many of the applications are from consumers leaving one mortgage broker or bank and applying with another to take advantage of lower rates.
Hey ActiveRain mortgage professionals, is this really happening? How common is it?
Hey ActiveRain real esate agents, will lower interest rates ignite the market?
Richard - I just had a conversation with a fellow agent today about this happening. Her client wants to go to a new lender to get a better rate. I don't blame him. One of the lenders I like to refer people to will gladly drop rates (with no fees) while a loan is in process and I think all lenders should look at this as a practice, I think its good for business and would certainly encourage more people to feel like their lender is on their side (which is one thing the industry could use right now after so much bad press). There are so many good sides to it as well...if a buyer feels confident in their lender and feels they are being taken care of, they would (in my opinion) probably be a lot more likely to speak to the lender when they're in trouble. Comfort and trust go a long way.
That's part of it, but I think a bigger issue will be that a lot of lenders locking in loan applications will be terribly disapointed when they appraise houses for the loan. A lot of borrowers are upside down in their homes and their refi applications will never close because of it.
I have a local competitor that braggedin the media that they locked in $35 million in refi applications. I have a friend that works there and they're finding that they won't close half of their applications because the borrowers are upside down.
Richard: It appears that way but I believe you're right. My question is why would a loan originator go to the trouble of taking an app. without checking value, etc? To me that's a waste of time. I remember a slew of applications at the first of the year when rates dropped to 5% for a couple of hours. The problem was the guidelines were getting restrictive. Fast forward ahead to now. Guidelines are even more cumbersome, home values have dropped, and it doesn't always make sense for a homeowner to refinance to save 1/2 point. The proof is in the pudding. We'll see what the numbers look like in January or February. I would bet closings won't have increased dramatically.
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