Low mortgage rates bring on rush of homebuyers, refinancing

REHOBOTH BEACH — Mortgage rates are at historic lows, and many Delawareans are pouncing on them, along with others seeking to relocate to the First State.

Whether it’s a new home purchase or refinancing an existing one, opportunity to find an affordable interest rate has never been better.
“I’ve been in the lending business for 25 years across the state, and I’d have to say, it’s the busiest time I’ve encountered,” Atlantic Bay Mortgage Group senior mortgage banker Peter Green said from Rehoboth Beach this week.

According to mortgage buyer Freddie Mac on Thursday, the current average 2.98% rate for a 30-year fixed mortgage was the lowest since tracking began in 1971. The previous three weeks’ averages of 3.13%, 3.07% and 3.03% were records as well before they were quickly eclipsed.

The news on Thursday was good, too, for 15-year fixed rates, which dropped from 2.51% to 2.48% and provided a lucrative option to refinance and take money from the deal and/or perhaps reduce monthly home payments.

And as COVID-19 continues its deadly hold on the country and the economy sputters, mortgages and refinances will remain lucrative to those with stable employment and past payment history, along with decent credit scores and liquid assets, industry professionals say.

“We were watching a couple weeks ago as the rates dropped to a 50-year low and saying, ‘This will never happen again,’ ” said The Mortgage Market of Delaware vice president Chad Moore in Lewes.

“A couple days later, it broke its own record again and then again after that.”

In Magnolia, Wesley Going’s family of five will benefit from a 30-year rate drop from 3.9% to 2.9% through a refinance.

“That 1% sounds small, but when you look at it coming out of a big number, then it means a lot,” he said Thursday. “You don’t know how much it will save you until you see the numbers on paper.

“This will allow us to pay the house off earlier, finance other things we couldn’t have. It’s just going to be a great benefit to our entire family.”
Eventually, there was no ignoring a golden opportunity to take part in history, according to Mr. Going.

“My wife and I kept hearing about the incredibly low rates on the news and received junk mail about them, and we finally asked ourselves, ‘What harm can it do to at least try?’ ”

Opined Sam Khater, Freddie Mac’s chief economist, “The drop has led to increased homebuyer demand, and these low rates have been capitalized into asset prices in support of the financial markets.

“However, the countervailing force for the economy has been the rise in new virus cases, which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.”

At 1st Capitol Mortgage in Dover, owner and broker Larry Knopf typically handled around 10 refinances annually. From April through June this year though, he was involved in seven or eight. After typically handling mostly purchase deals during his nearly 30 years in the industry, half of his current business comes from refinances.

When conventional 30-year rates ranged from 6% to 8% many years ago, Mr. Knopf said industry professionals thought the getting was pretty good.
“I love to see it now, and what I’ve learned over the years is that setting expectations are almost a waste of time,” he said.

“There’s really no parameters you can look at and predict the way it’s going to go. It’s unpredictable and can turn on a dime, so when you get the ball, you run with it, put in the extra hours of work and take advantage of it.”

Lower and lower
Atlantic Bay Mortgage Group has balanced 100-plus customers at a time, including those who now plan to telecommute to work and see opportunity to leave the city and find open space in Delaware, according to Mr. Green. The surge in prospective homebuyers is particularly pronounced in the southern part of the First State, he said.

“A good portion of them are set on working from home and indicating that they can live where they want to instead of the restriction of having to get a new job wherever they move to,” said Mr. Green, opining that Delaware’s relatively low property taxes and cost of living are enticing, as well.

Rates are making homes more affordable as potential buyers, who had been shut in, appear to be returning to the market. The Associated Press reported last week that pending home sales jumped a record 44.3% in May as a comeback appears to be building in the sector, according to the National Association of Realtors.

Loans that previously took a month to process are closing within two to three weeks from application submission to attorney, Mr. Moore said.

Locked-in rates, typically running for 30 days, have dropped to 22 days, so would-be buyers are more flexible to commit to the next big interest drop.

Also, appraisals running perhaps $600 are being waived due in part to coronavirus-related restrictions and the bigger ratio of highly qualified customers, “people who are really serious about homebuying,” Mr. Moore said.

Never busier professionally, Mr. Green takes personal satisfaction in facilitating a purchase or refinance between lender and buyer.

“It’s extremely exciting because we are able to help people get into homes at the lowest cost points ever and refinance to save and put an extra $500 to $600 in someone’s pocket,” he said.

“To be honest, that’s just fun. It’s a joy to be a part of it right now.”

With so many business sectors hard hit by the pandemic, Mr. Moore said the opposite effect results in mortgages and refinances.

“Essentially, the weaker our economy, the better the rates get,” said Mr. Moore, noting that dropping bond prices also play a large part in fueling the historic era.

“The markets were already rocky and, at times, unpredictable in the months prior to the outbreak, but the virus sent them into a nosedive.

“It seems rates have hit rock bottom now, but we don’t foresee them bouncing back up any time soon. As long as the future is still so uncertain without a vaccine yet and the political environment remains volatile, these market conditions will most likely continue.”

Upgrades and fixes
According to Main Street Home Loans regional vice president Devin Wiley, some Delawareans flush with federal stimulus money and no summer vacation are reinvesting in home improvements through refinancing.
They’re not planning on moving during the uncertain time, he said, and thus buying into a contractor for residential upgrades and fixes.

Following an initial downturn with COVID-19’s arrival in March, rates plummeted as conditions were at least stabilized.

“Business froze up a little the first couple weeks of lockdown, due to the uncertainty and, of course, the many layoffs and furloughs,” Mr. Moore said. “Lenders responded initially by tightening their guidelines. Some stopped offering certain loans, such as cash-out refinances, while others intentionally priced themselves out of the market to stem the tide of incoming files due to some top players actually shutting down.

“Now though, the dust has settled. Lenders are getting back to business as normal, and rates are even better than before.”

Prior to COVID-19, many lending facilities were already well-equipped to adapt to out-of-office mandates and closures, fears of close personal contact and whatever else came with the pandemic.

“We’ve had the ability to work from home for the past 14 years, and 99% of our clients communicate with us via email, text or phone, and e-sign their application anyway, so we really haven’t seen any challenges or obstacles to how we operate,” Mr. Moore said. “The only major change to the process involved the actual closings. Since closings are typically held in attorneys’ offices, we had a number of closings that were conducted remotely over the phone in front of a notary, but that was mainly in the first two months of lockdown.

“The attorneys’ offices have opened back up; however, they’re limiting the number of people present, so we aren’t able to attend closings alongside our clients like we used to.”

Chad Moore
Larry Knopf