The refinancing market is starting to slow

Sales boomerang released its Third Quarter 2021 Mortgage Market Opportunities report, which found that despite the decline in lending volume, there were several fertile opportunities for mortgage lenders, including a high incidence of well-positioned borrowers to refinance at a better rate, remove FHA mortgage insurance, or tap into home equity.

Sales Boomerang Loan Opportunity Alerts identify contacts in a lender’s database who are actively looking for a mortgage or who may qualify for a new mortgage. Across the sample, the frequency of each type of alert in Q3 2021 was as follows:

  • Mortgage application alert: 5.27% of contacts monitored (down 10.22% from Q2): A customer or prospect has made purchases from a competitor in the past 24 hours.
  • EPO Alert: 2.23% of contacts monitored (down 8.23% from Q2): A customer or prospect whose loan was closed ≤ 6 months ago has made purchases from a competitor in the past 24 hours.
  • Credit Improvement Alert:32% of contacts monitored (down 40.00% from Q2): A customer or prospect improved their FICO score.
  • New announcement alert: 04% of contacts monitored (down 24.09% from Q2): a client or prospect has put their house up for sale.
  • Actions alert: 02% of contacts monitored (down 6.20% from Q2): A client or prospect’s home equity has increased.
  • Rate alert: 96% of contacts monitored (down 47.79% from Q2): The interest rate on a client or prospect’s existing mortgage is significantly higher than going rates.

“As industry experts predicted, we are starting to see the refinancing market slow down and the buying market has yet to take over,” said the CEO of Sales Boomerang. Alex kutshin. “Yet the big picture indicates that we are still in the midst of a real estate boom. Many buying and refinancing opportunities remain, and our data insights point to a myriad of ways lenders can improve borrowers’ financial lives with the right loan product.

Just last week, the Mortgage Bankers Association (MBA) found that the refinancing business share of mortgage application volume increased to 66.4% of total applications, from 66.2% the previous week.

“The rate hike, mainly later in the week, resulted in a decrease in purchase and refinancing requests, with a significant drop in government loan requests,” said Joel kan, associate vice-president of economic and industrial forecasting of the MBA. “Demand for conventional loans has increased, driven by an increase in conventional refinancing. Perhaps this was a sign that some borrowers reacted to higher rates and decided to refinance. “

The window for refis may slowly close, as last week Freddie Mac’s latest Primary Mortgage Market Survey (PMMS) found that the 30-year Fixed Rate Mortgage (FRM) has passed the 3 mark. % to 3.01% for the week ending September 30. , 2021.

The Mortgage Market Opportunities report draws on data from the Sales Boomerang system to identify relevant market opportunities for borrowers and lenders today. Sales Boomerang examined data from more than 150 residential mortgage lenders who use its borrower information and retention tools to monitor millions of customer and prospect records. Sales Boomerang then calculated the overall frequency with which these contact records triggered loan opportunity, prescriptive scenario, and risk and retention alerts in the second and third quarters of 2021.

Sales Boomerang’s prescriptive scenario alerts analyze not only whether a consumer could benefit from a given type of loan, but also whether or not the consumer is eligible for credit to apply for financing. The frequency of each alert during the third quarter of 2021 was as follows:

  • Withdrawal alert:31% of supervised contacts (up 291.82% from Q2): A borrower qualifies for credit and has accumulated enough equity to dip into the money in their home.
  • Rate and duration alert:86% of supervised contacts (up 34.49% from the second quarter): a borrower is credit-qualified and can benefit from current interest rates for refinancing.
  • Debt Alert:73% of supervised contacts (up 10.19% from the second quarter): A borrower is eligible for credit and can benefit from paying off other debts with the equity in their home.
  • FHA MI Removal Alert:27% of supervised contacts (up 366.03% from Q2): An FHA borrower has exceeded 20% equity and can opt out of mortgage default insurance (MI).

For a subset of lenders who manage service portfolios, the frequency of risk and retention alerts was as follows:

  • Risk and retention alert:18% of supervised contacts (down 1.23% from Q2): A customer engages in one or more of 15 credit activities that can put their managed loan at risk.

Although the frequency of home equity alerts declined slightly between the second and third quarters, nearly one in 12 borrowers experienced significant home equity growth in the last quarter. Additionally, the nearly 300% quarter-over-quarter increase in withdrawal alerts shows that borrowers have raised their credit scores alongside their equity, paving the way for more withdrawal refinancing and reductions. HELOC activity in the coming months.

The good performance of action-based alerts is underscored by the main observations of recent CoreLogic Owner Net Worth Report, which found that the average homeowner has earned $ 51,500 in equity over the past year, while U.S. homeowners as a whole have seen their equity increase by nearly $ 2.9 trillion since the second quarter from 2020.

“As long as interest rates remain low, refi opportunities remain on the table for many borrowers,” the report said. “This opportunity is evident in the quarter-over-quarter growth of the Rate-and-Term alert. However, with Mortgage Alerts and EPO Alerts both showing quarter-over-quarter declines, lenders will need to be proactive in contacting potential refi clients, as many eligible clients do not appear to be looking for loans themselves. rate. While market experts have long predicted a home buying boom at the end of 2021, the 24% quarter-over-quarter drop in new listing alerts suggests lenders may need to revise their revenue forecasts the end of the year.

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