WASHINGTON - Applications for mortgage refinancings plunged in February after a January spike had raised hopes refi’s could come to the rescue of the market.
The Mortgage Bankers Association reported that February data show volume declined sharply, and other lenders are reporting the same. Analysts are attributing the drop to tightened underwriting standards and the increase in mortgage rates, which have not followed the Fed’s decreases down and instead are up by nearly a full percentage point in just weeks.
Another problem: many lenders are unprepared for any surge in applications. “The whole supply chain that feeds funding from investors to brokers remains crippled,” Keith Gumbinger, a vice president at the Pompton Plains, N.J., research firm HSH Associates, told the American Banker. “The personnel support that makes capacity available is diminished. Back-end systems are impaired right now, and to jam all those loans into a funnel that can’t manage them means loans won’t get funded.”
