Reports of its demise have been greatly exaggerated

by Justin da Rosa21 Jan 2016
Originators were all but ready to accept the end of the refi era, but it may still have some life left in it.

“Rates have been dropping since the Fed lowered its rate, and with that we’ve seen them a good bit below 4% on conventional loans; there will still be a lot of refinances,” Roger Steur, senior loan officer with Principal Mortgage, told Mortgage Professional America. “A lot of people are jumping at the opportunity with rates improving.”

The refinance share of mortgage activity increased to 59.1% of total applications week-over-week for the week ending January 15 – up from 55.8, according to the Mortgage Bankers Association.
That’s a trend reversal many originators hadn’t expected.

“There are two types of refinance clients; rate-driven and cause-driven,” Larry Penilla, an originator with A&M Mortgage Group, told Mortgage Professional America in late December. “Rate-driven refinances are gone, but we can still expect cause-driven refi business; that business usually accounts for 15% of our deal, though.”

Penilla’s assessment was one shared by many at the time but with rates falling, refi business has been increasing.

As for how long refi business will continue to boom, it’s anyone’s guess. Steur says it will last as long as rates remain low.

“I end most years saying the next year is when rates will go up; I ended last year saying 2016 would be that year and I believe it,” he said. “People will continue to refinance because of attractive rates for the next few months and then refinances for necessity (will prevail).”


Should CFPB have more supervision over credit agencies?