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Refinance Resurgence: Interest Rates Dip Slightly, And Borrowers Jump On Mortgage Refinances

March 20, 2019 Raymond Bartreau

Refinances jumped to 35% of all Millennial originations this past January, according to Ellie Mae’s Millennial Tracker Survey.

Refinance Market Rebounds Due To Reduced Interest Rates

Refinances saw an increase in popularity two months ago, after interest rates lowered slightly. The 30-year fixed mortgage rate declined from 4.51% to 4.45% during the week of January 7th and has since remained low.

Freddie Mac Chief Economist Sam Khater said, “Mortgage rates fell to the lowest level in nine months, and in response, mortgage applications jumped more than 20%.”

U.S. Weekly Mortgage Rate Averages

The decrease in interest rates encouraged borrowers to refinance their mortgages in an effort to pay less per month. According to the National Association of Realtors (NAR) Chief Economist Lawrence Yun a 50 basis point change in rates “generally translates into about eighty dollars per month savings for the same home.”

The Federal Reserve has indicated they want to be patient. As a result, some economists believe there will be no further increase in interest rates in 2019, which could mean mortgage rates will remain steady. Yun said, “I feel comfortable that mortgage rates will be under 5% for essentially all of the year or most parts of the year.”

There are 3.27 million U.S. homeowners who could reduce their mortgage rates by 0.75% with refinance as of late February, when interest rates for the 30-year fixed fell to 4.35%. According to Black Knight data, the number of borrowers eligible for a refinance is up 16% year over year (YOY) and up 75% since the November 2017 low.

In addition, Black Knight reported that “more than 250,000 homeowners who took out their mortgages just last year on the higher end of the rate spectrum could now likely reduce their rate significantly by refinancing.”

2017 was the best year for refinance since 2013. In mid to late 2018, there was a significant decline in the refinance market as interest rates rose. Now that interest rates have declined again, refinances are appealing to select homeowners again.

How To Market Mortgage Refinances

Market Mortgage Refinances

Because of the increase in mortgage rates last year, many borrowers wrote off refinances, thinking they would only offer higher rates and payments. Now that rates have decreased, you, as a loan officer, will need to position refinances as a positive option to save money. Promote awareness of and generate excitement for borrowers’ abilities to save money through refinancing their mortgages.

Market a refinance as an opportunity to save money through your blogs, articles and other web content. Your copy should create a sense of urgency. Mortgage rates have just dropped, but that doesn’t mean they can’t rise next month. Borrowers should refinance right away, if it makes sense for their situations.

Mortgage sites should feature crisp and appealing landing pages that can nurture and inform prospective borrowers. Remember, the average homeowner may not understand all the small details of mortgage rate shifts. So use simple language, and focus on how refinances can save borrowers money.

For more tips, read “4 Simple Strategies For Marketing Mortgage To Millennials In 2019.”

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Contact Best Rate Referrals today.

About the Author

Raymond Bartreau

Raymond Bartreau is the Senior Vice President of Lending Partnerships at Digital Media Solutions, LLC (DMS), an industry leader in the world of customer acquisition and retention that helps clients maximize their digital marketing to beat the competition and accelerate growth. In this role, Raymond heads DMS subsidiary Best Rate Referrals, an award-winning consumer finance marketing firm with NMLS operating licenses in most states. In 2018, Best Rate Referrals expanded into the world of personal finance with the launch of Loan Advisor, a new online marketplace designed to provide consumers with simple and fast personal loan quotes from lenders for free. A leader with more than a decade of combined financial services and direct marketing experience, Raymond has spent his career providing lenders with the strategies and insights to better connect with consumers amid an ever changing rate-driven market. Raymond was instrumental in building one of fastest growing online mortgage marketplaces, www.MortgageAdvisor.com, which now generates demand from thousands of consumers monthly looking for purchase, refinance and home equity loans. A 2017 recipient of the HousingWire Insiders Award, Raymond also made the “National Mortgage Professional” magazine list of the top 40 under 40 in 2012, 2015 and 2016. He also was a Mortgage Professional Association “Hot 100” in 2014 and 2018.

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