Refinance Fee Hike Increases Rates

Mortgage interest rates continue to be near the all-time low levels we have continued to experience since June of this year. Mortgage rates are still at historically low levels despite the Federal Housing Finance Administration (FHFA) refinance fee hike that we wrote about in August, “Profiting from the Coronavirus Crisis?” By now this FHFA .5% fee increase has been implemented by most lenders.

This hike to the fee, not to the rate, of mortgage refinances means interest rates for mortgage refinance transactions sold to Fannie Mae and Freddie Mac (which is the majority of refinance loans funded) are seeing a .125% – .25% rate increase across the board.

Purchase Rates Lowest I’ve Ever Seen

Interest rates for home purchases on loan amounts that conform to Fannie/Freddie loan limits are at the lowest levels I have ever seen because the FHFA fee hike is only being applied to refinance transactions and not to purchase transactions.

California Home Purchase Demand

California overall is still seeing a high demand for home purchase financing, which continues to be exacerbated by low inventory coupled with historically low-interest rates.

Jumbo Loans

For loan amounts above the Fannie/Freddie loan limits, non-conforming or jumbo loans, availability has waxed and waned over the course of this year. I am currently seeing more lenders coming back into those markets each month.

We have gone from access to 60+ Jumbo lenders prior to March 2020
to zero lenders from March 2020 to June 2020
to ten lenders as of September 2020.

Jumbo lending tends to have tougher lending guidelines and so, the loans are more difficult to qualify for. Mortgage rates for jumbo loans before March 2020 were very competitive with Fannie/Freddie conforming loans.

Current Jumbo rates are within .25% – .5% of conforming loans.

It is still possible to pay an additional fee to buy down the rate on a jumbo 30 Year Fixed mortgage to below 3% APR, which is still a historically low rate environment, despite the overall lack of investor appetite for jumbo loans.

Purchase Loans Closing in 15-21 Days

In some markets, especially where I am physically located in the Bay Area, I am still closing purchase transactions in 15 to 21 days from receiving the ratified purchase contract.

The overwhelming number of refinances in the mortgage industry has slowed down refinancing, but I still have several solid lenders with competitive interest rates who are prioritizing purchase transactions. This means we can remain at competitive closing time frames which can tip the scale for buyers who are working with me to purchase a home.

With so many multiple offers going in, and the limited available housing inventory, having these short closing options can be the difference that allows my clients to win the bidding war and get into contract.

Covid-19 Impact on Home Purchases

I believe purchase business will continue to be brisk as people continue to migrate due to the resettling that Covid-19 has created. Normal selling and buying seasons are less evident with so many people working and schooling from home.

Being able to write as competitive an offer as possible to purchase a home will be important as we continue to move through mortgage rates in these uncharted waters until the current crisis subsides.

Covid-19 Impact on Refinances

Speaking of uncharted waters, this crisis has created a refinance bubble that has seen my number of closings skyrocket to well past twice my loan volume from 2019, which was my third-busiest year prior to this year! By the end of 2020, I may end up almost tripling my 2019 loan volume.

I cannot sustain this amount of work and loan volume without taking a break. Be aware that I am planning on slowing my workload down for the month of December and into January of 2021.

Get Your Refinance Application in Before December 1!

Thus I will stop taking refinance applications for one month, starting December 1st of this year. If you need to get a refinance application in with me before the end of this year, now is the time to do it.

We’re All Navigating the Challenges

Thank you again for your continued patronage, support, and patience during this historic time. Wishing you and your loved ones good health as we navigate all of the current challenges, the pandemic, the election, the fires, and all that continues to ensue, together.

Yours,

Vic

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