American homeowners have been taking advantage of ultra low mortgage rates and refinancing their mortgages in record numbers in the second quarter of 2020. According to analytics firm Black Knight, refinance mortgage lending was up more than 60% from the first three months of the year and more than 200% from the same time last year, as the rates on offer from the best refinance mortgage companies fell to record lows. Such has been the decline in rates, many borrowers have been able to save hundreds of dollars on their monthly payments by refinancing to a new deal.
“Despite the nation being under pandemic-related lockdowns for much of the quarter, a record-breaking surge in mortgage originations occurred in Q2 2020, driven by the record-low interest rate environment,” said Black Knight Data & Analytics President Ben Graboske. “Nearly $1.1 trillion in first lien mortgages were originated in Q2 2020, which is the largest quarterly origination volume we’ve seen since first reporting on the metric in January 2000.”
What about home buyers?
Among those looking to buy a home, the new data reveals purchase lending fell 8% year-over-year during the quarter as the traditional spring homebuying season suffered under the consequences of coronavirus-related restrictions. However, rather than signalling a permanent decline, other indicators of mortgage lending activity suggest that the homebuying season has simply been pushed forward into the third quarter, with the best mortgage lenders seeing a significant uplift in the number of prospective buyers locking in rates.
“Purchase locks in Q3 2020 have already made up for the losses of a COVID-impacted Q2 – and then some – based upon normal seasonal expectations,” added Graboske. “In fact, rate locks are suggesting that we could see Q3 purchase lending break typical seasonal trends and rise by 30-40%, which would push us to a new record high.”
Is now still a good time to refinance?
For those who are yet to refinance their mortgage, the advice is not to wait any longer. Last month’s surprise announcement of a rise in agency fees saw lenders quickly increase mortgage rates as they looked to guard against higher costs. While rates have dipped lower again since, the sudden uptick in mortgage costs emanating from one unexpected decision serves as a reminder to take advantage of the best mortgage deals available now.
According to Black Knight, there there are still almost 18 million US homeowners with good credit and at least 20% equity who could cut at least 0.75% off their current first lien rate by refinancing their mortgage.
How do you refinance your mortgage?
If you’re among them, there is no time like the present to make your refinance mortgage move. If the thought of scouring the market for the best mortgage rates is what has been putting you off, make use of the shortcuts to finding a mortgage deal that are widely available online.
Comparison sites such as mortgage.net, for instance, provide a way to canvass the mortgage options available across a wide range of mortgage lenders all at the same time. You only need to fill in your details and loan requirements once and mortgage companies will start to get in touch with you with the best mortgage deals that they can offer.
There will still be some work for you to do, including preparing the documents that a new mortgage provider will want to see. This means readying your paperwork in relation to your employment, income, expenditure, credit card and personal loan debt, and so on. In light of the more uncertain economic times, it’s worth remembering that refinance mortgage companies are being slightly more cautious in who they lend to as well. For this reason, make sure your finances are in as good order as they possibly can be, and perhaps even consider the benefits of the best credit repair services should your credit score need a slight boost.