Mortgage Industry Trends

Let’s Talk a Little About Refis, Again

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Refis-not-ready-ride-into-sunset-market-still-aliveWith things a little slow in the mortgage world, the conversation again comes around to refinances.

Rates have increased slightly and according to those “in the know,” they should continue to rise.

With the rise in mortgage rates, smart money says refinances will decline (again). But, we have heard that before and refi’s seem to be hanging around.

Maybe this time will do the trick. But, I wouldn’t totally discount the refinance market. Although they have declined, the share of the market attributable to refinancing keeps beating projections. How long can it last?

Homeowner equity is at an all-time high and home values continue to increase. If someone is considering buying a new home, they have fewer homes to select from, higher prices, and higher mortgage rates.

It’s projected that new home sales will outpace existing home sales next year and they traditionally are more expensive.

Maybe, just maybe, some homeowners will opt for a refi to pay off some higher rate debt, like student loans or credit cards, and/or to fix up their current abode; especially if they like the neighborhood and schools, and have school-age children.

Why uproot the family and move the kids when they can take some cash out of their current home for the upgrades they always wanted and continue to live where they are now comfortable.

 

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Moving can be a major ordeal and a huge family disruption. In the end, their monthly mortgage payment may stay about the same as compared to buying a new or existing home now on the market.

Even with mortgage rates going up slightly, a refinance may still be a very viable option for existing homeowners looking to upgrade.

Opportunities will still exist for lenders in the refinance and HELOC markets, especially when the competition for the purchase business is going to be fierce. The volume may not be as great but the refi business is still out there.

A little bonus is that according to most reports potential fraud is less likely on a refinance loan than on one for a purchase transaction. Fewer players involved.

Quality and compliance concerns are the same as with any loans but you may get some breaks in reduced appraisal requirements from the agencies. Every little bit helps both the lender and the borrower.

Don’t give up totally on refi’s just yet. With home values rising, so will homeowner’s equity and there are still homeowners who may want to tap into that equity. All they need is a little push, some education, and a qualified, willing mortgage lender to assist them.

The refi may still ride again.

Michael Vitali

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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Michael Vitali

About Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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