How the Refinancing Boom May Hurt the Spring Buying Season
The refinancing boom may be contributing to the new home sales bust. Homeowners rushing to refinance with the low mortgage rates are overwhelming lenders, causing delays in processing new mortgage applications and sending out appraisers to assess houses. In an effort to slow down the refinancing bonanza, lenders pushed the mortgage rates up from 3.13 percent to 4.13 percent, even as the Federal Reserve slashed federal interest rates to zero. These setbacks mixed with overall buyer concerns and lender caution may slow down the already stalling new home market. But experts say that lenders still prioritize buyers as they are more reliable customers. Lenders will continue to process new mortgage applications—just at a much slower pace.
As homeowners raced to refinance their home loans amid record-low mortgage rates recently, they overwhelmed lenders by their sheer numbers—triggering repercussions for the shoppers gearing up for the spring home-buying season.
"If a buyer finds a house today, they’re going to need a longer amount of time to close," says Tucson, AZ–based mortgage broker Rocke Andrews of Lending Arizona. He's also the president of the National Association of Mortgage Brokers, a national trade group. "Things are taking a little bit longer because of the large number of refinances going through the system."