Mortgage Lender Projecting Wave of Refinancings
PITTSBURGH – The president of one major mortgage lender believes the downgrade by S&P of U.S. debt will actually be a boost to mortgage refinancings.
PNC Mortgage president Saiyid Naqvi said refinancing demand was already strong, and the only issues now are whether the industry can fulfill all the requests, given the constraints of lower appraisals, tightened credit guidelines and shrunken staffs.
Refi applications jumped 30.4% last week, according to the Mortgage Bankers Association. Such applications have surged 63% in the past month, according to American Banker, an affiliate of Credit Union Journal.
With the average 30-year fixed rate below 4.5% again, many homeowners who refinanced in the past two years can benefit by doing so again. After the downgrade, “we saw a big rally in Treasuries, and mortgage rates have come down near historic lows,” said Naqvi, who has been around long enough to have worked for Sears when it owned a mortgage company. “With that, we’re seeing a surge in refinance volume.”
At PNC Mortgage, a top-20 home lender owned by $263 billion-asset PNC Financial Services Group Inc. in Pittsburgh, daily refi application volume has doubled from last month, Naqvi says. Many homeowners with adjustable rate loans that are expected to reset in a year are trying to lock in rates now, though it is unclear how many “won’t qualify,” he says, because they have too little equity in their homes or bad credit.