Good morning. Today's headlines are all about a surge in mortgage refinance applications. While this news makes for good headlines, one needs to dig a little deeper to find that the pull through rate (the number of applications that actually become new mortgages) is about 50%. Many of those looking to get a new mortgage don't have the income, credit or equity to qualify. The WSJ article mentions that Fannie and Freddie have programs that allow for the mortgage to be 120% of the value of the house. If that is that case, none of the lenders that we do business with are offering the program to mortgage brokers.
Generally speaking, it takes about a 1% reduction in rate for a refi to make sence. Larger loans don't need quite as big of a reduction...however because rates are only dropping for coforming loan amounts, those with jumbo mortgages are out of luck until credit begins to thaw.
Wall Sreeet Journal article on refi surge
New York Times article on surge in new mortgage applications
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