Mortgage Boomlet

Boomlet

by Kris Barros

“Boomlet” is apparently a word. Merriam-webster.com defines it as “a sudden and usually brief increase in business activity: a small boom”. Apparently, we are in a mortgage application “boomlet”. Lower interest rates, “thanks” to the Brexit, pushed total mortgage application volume up 7.2% last week even with the Fourth of July holiday, according to the Mortgage Bankers Association. Refinance applications were entirely behind the jump. Applications from current homeowners increased 11% from the previous week to the highest level in three years. So, why are low rates seemingly so enticing to current homeowners but apparently had little effect on would-be homebuyers? From a lender’s perspective it is easy to see. Current homeowners clearly understand the benefits. There is an immediate benefit they can see. They currently have a payment which is lowered by refinancing. From a buyers perspective it doesn’t seem like they fully understand the impact rates have on their buying power. In some instances, what have been very favorable rates throughout this home buying season and the limited availability of “starter” homes have pushed asking prices higher, offsetting the benefit of the lower interest rates to some degree. This impact on potential homebuyers won’t go away anytime soon. This summer may be the best opportunity for many to purchase a home over the next couple of years. If Merriam-Webster’s definition is accurate, this “boomlet” is likely to be brief. What will it take to bring home buyers to the market in time to take advantage of the rates currently available? They say “knowledge is power”. Making the benefits of buying “now” apparent to buyers is something a lender can help with. At today’s rates, the affordability of a mortgage, even one with a limited down payment, shouldn’t be an unknown to any borrower. With Embrace’s Approved to Move™ program, potential home buyers are fully underwritten and approved prior to identifying a home. The process allows potential borrowers to explore various programs and terms to maximize their buying power. The best part of the program is its ability to compress the buyer’s purchase time-table to allow them to take advantage of what may or may not be a “boomlet” driven by recent low rates.