New year, same boom: Refinancing activity still surging in 2020
After interest rates fell through much of 2019 , refinance activity surged as homeowners looked to take advantage of what (at the time) looked like historically low rates. There were questions as to how long rates would remain at such low levels, and those ever-present FOMO concerns that one might be missing out on an ‘historic opportunity.’
Then 2020 happened. While the coronavirus pandemic has had a massive impact on nearly all sectors of the economy, one area that has remained resilient is the demand for mortgage refinancing. So, if you’re thinking about refinancing in 2020, let us break down the numbers, the potential benefits, and everything you need to know to help you make the best decision.
So, why refinance?
Refinancing your mortgage is attractive because it gives homeowners a great opportunity to get a lower rate*, have some extra money in the bank each month, adjust the length of their loan to better fit their situation, get cash out to consolidate some larger bills, or do some renovations to make their good home even better. Bottom line? A homeowner’s bottom line could improve with a refinance.
How long can they stay so low?
You wouldn’t be wrong if you’ve grown tired, or even incredulous, every time you hear that rates have fallen to new lows. That’s because, so far this year mortgage rates have hit a new record low nine times in 2020. Nine times.
Why rates keep falling
The average interest rates for a mortgage refinance loan can vary due to a number of factors, but a large reason behind 2020’s falling rates has been the Federal Reserve. By providing liquidity to help stabilize financial markets, the Fed’s policy of bond buying has had the effect of bringing down interest rates on many forms of loans, including mortgage loans.
What it’s meant for refinance activity
The steady of trend of downward-moving rates has led to record-breaking mortgage-related transactions, according to data analytics firm Black Knight, with more than 2.3 million originations in the second quarter of 2020. That translates to four times more refinances than the second quarter of 2019, and a 17-year high for total refinance originations. 
Millions could save, 2.0
How many homeowners could be benefitting from the current refinancing boom? On September 11, Freddie Mac’s Private Mortgage Market Survey (PMMS) reported that the average 30-year mortgage rate had fallen to a new low of 2.86%. According to Black Knight’s analysis, 19.3 million homeowners could still save with a refinance. The average savings among high-quality refinance candidates would be $299 a month, while nearly 2.5 million could save $500 a month or more. And if all 19.3 million were to take advantage of current rates, it would net a total potential savings of $5.8 billion per month, the largest combined savings total ever. 
Potentially tighter standards
It’s worth noting that, because of concerns about the long-term effects of the pandemic, many banks are tightening credit standards for certain types of financing, meaning it could be harder for some borrowers to get approved.  Speaking with an experienced loan officer can help answer questions about new credit standards and how they might affect you.
Is refinancing right for you?
Does a refi make sense in your case? Your favorite loan officer can provide you with a definitive answer, but the odds are that if you haven’t had a mortgage review in the past year it’s worth a look. Getting either a lower rate or adjusting the length of your mortgage could make a big difference in how you plan your financial future. After all, if you love your home, why not stay there and potentially pay less to do so?
*Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Proper Rate for current rates. Restrictions apply.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Proper Rate for current rates and for more information.