Rates at 30 Year Low

This week, mortgage rates for conforming, single-unit, residential properties have come back down to the lowest levels in three decades, with some borrowers being able to lock and close 30-year fixed-rate loans at 3% APR with close-to-zero closing costs.

First Mortgage & No Cash-Out Refinance

This rate environment only exists for first mortgages and no-cash-out, first-mortgage refinances where the property type is a single unit, residential property and the loan amount is under the standard conforming loan limit of $510,400. Mortgage rates currently exist below 3% APR for 30-, 25-, 20-, 15-, and 10-year fixed loan products for mortgages that fit into this narrow window.

Other Loans Still Impacted

The majority of loan products, outside of no-cash-out refinances, and purchases where the loan amount is below the standard conforming loan limits, are still severely impacted by a lack of investor appetite for any mortgage that doesn’t fit into a very small box.

Jumbo loans, cash-out refinances, loans for multi-unit properties, rental properties, alternate lending products for self-employed borrowers, and even Home Equity Lines of Credit are all being impacted by a lack of investor interest due to the massive job losses and uncertainty created by COVID-19.

Demand Exceeding Banks’ Capacity

The statistic that keeps getting repeated in the media is that there are $10 trillion worth of mortgages that could potentially benefit from a mortgage refinance, while the mortgage industry can only process $2 trillion per year. This means the process is very slow for many lenders, primarily institutional retail banks.

Our Refinances Are Closing Quickly!

However, we are still closing most refinances in 30 – 45 days, with some of our lenders on fire and closing in three weeks or less! One of our primary lenders, who is offering 30 year fixed rates at the 3% APR and lower, requires us to close those loans with them in 22 days or less!

Independent mortgage consultants like myself are working 16+ hour days, for over ten weeks straight now, to try and keep up with the historic level of demand. We are currently closing about half of the loan requests that came in an avalanche in late February/early March, which is creating more bandwidth for processing new loan requests.

Waiting for the Next Wave

It is still a waiting game right now, until a shift in the market opens up the opportunity for the other half of the loan applications in the pipeline to close. But eventually, when mortgage lending comes back, those deals will clear and the mortgage lending industry will be ready for the next wave.

These waves will keep coming for the foreseeable future with the Federal Reserve and Fed Chair Jerome Powell committed to helping the economy get back on its feet through the various stimulus tools that they are currently employing — and similarly did employ during the Great Recession.

While these low first mortgage rates benefit home buyers, there are housing market repercussions expected.

Mortgage Rates Down Through 2020

This means mortgage rates should be at or near historically low levels through the rest of this year and into next year, at the very least.

Are you considering taking advantage of these historically low first mortgage and refinance rates? Contact me today!


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