The mortgage industry is holding its breath for the punchline of an April Fools’ joke that may not have one. This month, we watched as refinances finally dipped below 50 percent of total mortgage volume, and with rates continuing to rise, some are solemnly noting the time of death for the refi era.
For all of the carnage it wrought, the pandemic managed to usher in the lowest 30-year mortgage rates in history, followed by a year of rapidly rising home prices. Stay-at-home orders gave homeowners plenty of time to stare at their dated kitchens and aging roofs with visions of equity-fueled remodels, and with equity ripening like a summer peach, it became tempting for many to take a bite. Homeowners tapped over $275 billion in home equity in 2021, a number that cascaded upward as the year rolled on. These dramatic shifts in rates and equity have led to the highest level of refinances since 2005, with lenders originating $1.2 trillion of them in 2021 and with total origination volume reaching a record-high $4.4 trillion.
Now, with rates beginning to rise amidst soaring inflation, it appears likely that the share of refinances will continue to trend downward. In a lower-volume environment, it’s more important than ever to differentiate yourself, and product knowledge is an easy way to do so. With less business to go around, showcasing your expertise to borrowers can be the difference between losing and retaining critical business. Explore our FHA, USDA, and VA loan courses to brush up on products we anticipate becoming more popular in the coming year.
But for those of us mourning this historical two-year run, there’s no remedy like music. Listen as Don McLoan waxes poetic about the waning age of the refinance. Bye-bye, American Refi’s; perhaps we’ll see you amidst the next national crisis!