What Does the Mortgage Industry Look Like 6 Months Into COVID?

We can all agree that time has taken on a surreal quality this year, so it may come as a surprise that we’re approaching the six-month mark since March – when the COVID-19 pandemic turned our lives upside down. So much has happened in that time, globally and individually, and we’re still working to return to a place of normal.
The Highs and Lows on the Road to Recovery

The mortgage system worked quickly last spring to make the necessary adjustments for people’s financial and personal well-being. Brokers and support staff moved offices to home and shifted from in-person client meetings to Zoom and Skype calls. Digital transactions like virtual notarizing and electronic signatures became the norm where possible, and home appraisers continue to follow CDC (Center for Disease Control) guidelines to ensure everyone’s safety and comfort.

Even in the face of adverse job loss and uncertainty, the resilience of the industry reflected everyone’s desire to navigate these unprecedented (hands down, the most overused word of 2020) times in order to make the best financial decisions.

While homeowners and home-buyers may have hit the pause button in the early days of the crisis, the market rebounded with more existing home sales this July than we’ve seen in more than three years. This can naturally be contributed in part to the continuing drop in interest rates, as well as a newer perspective and appreciation of “home” during the quarantine.

A significant number of mortgages went into forbearance early on, which is an agreement with the lender to either reduce your monthly payments or suspend them entirely for a set period of time – typically ranging from 90 days to a year. However, according to the Mortgage Bankers Association (MBA), those numbers began to drop starting in June and continue to decrease each week.

Low Rates Continue to Entice Homeowners

Compared to a year ago, the current interest rates are still historically low, and the Feds have indicated that they won’t increase in the foreseeable future as the economy enters a recovery phase.

This has also been especially beneficial to those homeowners seeking to refinance their mortgage. Freddie Mac reported nearly $400 billion in single-family refinances by the end of the first quarter, with as much as $1.23 trillion of loans forecast for the year as a whole. Refinancing homeowners during this period averaged a lower rate of approximately 0.75 percentage points, saving on average about $2,000 in annual interest payments.

The recent announcement by Freddie Mac and Fannie Mae of a new “adverse market refinance fee” of .5 percent may have contributed to a slight lull in applications, but the nominal difference can be absorbed into the mortgage and is still offset by the competitively low interest rates. Lenders are also seeing the backlog of refi applications ease up from earlier this summer, which is good news for borrowers.

Tips for Refinancing in a Pandemic

Homeowners who have adapted and persevered through these difficult months may find themselves in the position to either sell or leverage the equity in their home, further reinforcing their financial security. With home values remaining robust and the reassurance of the Federal Reserve that interest rates will stay down, it may be the perfect time to refinance with the objective of either reduced monthly payments, a shorter term, or extra cash.

As always, experts recommend shopping around – but not just for the best rates and mortgage program. This year, more than ever before it’s important to feel comfortable and confident in your lender’s safety precautions and protocols. We at Titan Mutual Lending Inc. invite you to call and discuss your refinancing questions. You can be assured that your financial and personal well-being is our priority.

When refinancing an existing loan, total finance charges may be higher over the life of the loan.

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