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Rates Plunge Lower

Mortgage rates have plunged to the lowest levels in more than a half-century, but we are not seeing a surge in refinance applications as one would expect.

The average national 30 year fixed rate conventional note fell to 4.57% this week according to several online sources.  The National Bureau of Economic Research says FHA-insured mortgage rates averaged 4.56% in February of 1955. To read about the economy in 1955, click here.

With rates this low, you would expect the refinance applications to be skyrocketing, but, as noted above, they are not.  It seems that we have a nation full of people that have self-underwritten their loans and, in turn, denied themselves the loan before ever talking to a loan officer.  This is the case mainly because the media would have them believe that even those with great credit, great income and great equity are getting denied.  This simply is not true.  In fact, I rarely am burdened with telling someone that they are not approved for a loan once they have made an application.

 

Freddie Mac’s Chief Economist issued a note this week aptly names, “Where Have All the Originations Gone?”  In the note, he says that the following has affected originations:

  1. 25% of homebuyers are paying cash
  2. Falling home values prevent or dissuade homeowners from refinancing (I would add that there are government programs to help for this specific issue; contact me to see if you qualify)
  3. Home equity lenders are blocking refinances by refusing to agree to remain in second lien position (read more about this here)
  4. Few people are buying homes

 

Bottom line: If you are guilty of self-underwriting, please call me for a free consult.  As a mortgage lending professional, I am much more qualified that your six o’clock news reporters to help you determine whether you are able to refinance; all you have to do is contact me.

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