Millennials rushed to check their refinancing options with the recent drop in mortgage interest rates. In fact, refinance applications recently rose 116%, according to the Mortgage Bankers Association.
Record Numbers
CNBC reported that Quicken Loans experienced their best quarter for mortgage originations since they started their business 34 years. And their total quarter volume hit $32 billion.
Although the majority was due to refinancing, there was also an increase in homebuying that didn’t hurt. A decrease in the average interest rate on the 30-year fixed mortgage is another potential contributor to their record-breaking numbers.
In past years, seeing a slowdown in refinances due to rising interest rates led to layoffs in the industry. Today, Quicken Loans is looking to hire new people to manage the massive demand for refinances.
Millennials & Mortgages
Millennials were eager to take advantage of the rate drop with almost double the amount seeking to refinance their mortgages. According to CNBC, Ellie Mae reported a 14% jump.
Joe Tyrrell, the chief operating officer of Ellie Mae, told CNBC that millennials were anxious to lock in a lower interest rate. He says Ellie Mae will be watching how drops affect behavior as consumers, especially millennials, look to lower their mortgage payments.
CNBC also reported SunTrust Bank saw a rise in customer volume. The bank was even warning people it might take longer to get through the process with the increase in clients seeking to refinance.
Many Reasons to Refinance
Sherry Graziano, the senior vice president and mortgage transformation officer at SunTrust, explained to CNBC that there are many reasons clients are looking to refinance, including:
- Lowering monthly payments
- Shopping for different mortgage products
- Consolidating credit cards
- Incorporating student loan debt into a loan at a lower rate
She warns people to keep in mind that there are transaction costs involved when refinancing. For homeowners who might be planning a move in the next year or two, they could save more money by sticking with their current mortgage rates, instead of paying the transaction fees.
Plan With a Lender
With the ongoing fluctuations in mortgage rates, it might be best to speak with a lender to have them keep an eye out for the right time to refinance. CNBC noted that at the time of their report, rates fell more than 15 base points in eight days.
Black Knight told CNBC that as these numbers fluctuate so does the number of people eligible to qualify and benefit from refinancing. They say that the best refinance candidates are those with a 30-year mortgage and a maximum 80% loan-to-value ratio. They also need a credit score of 720 and above. These people could take off a minimum of 0.75% off their current first lien rate if they take the time to refinance.
Having an experienced title partner like Lakeside Title can streamline refinance closings for mortgage holders nationwide. Now’s the time for lenders to take advantage of the boom in refinances while consumers are anxious to lower their payments and improve their own monthly cash flow.
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