Mortgage Update – September 2020

With 30- year rates continuing to hover below 3%, the refinance and purchase market is exceptionally strong.

I hope this note finds you all safe and healthy!  My name is Joe Boyle, and I am a Mortgage Loan Originator with Cornerstone Home Lending, LLC. What a year 2020 has been thus far.  Sitting down to write a column regarding the mortgage business is tough today for one reason!  Where do I start!?  Covid-19, mortgage backed securities, interest rates, supply/demand, a looming Presidential Election, volume/capacity, liquidity crunches, margin compression, governmental regulation, forbearance, furlough…. these are all items we in the mortgage business and real estate industry are dealing with. 

First off, we in the mortgage industry are very fortunate to be able to have jobs and employment during this time.  Covid-19 has been so unkind to so many.  The pandemic has resulted in one of the largest financial collapses, bail outs, etc. in American History.  As a result, we have seen interest rates plummet.  The Federal Reserve stepped in earlier this year with some relief.  The Fed’s began purchasing mortgage backed securities.  As a result, rates have fallen and stabilized.  I do believe the Fed’s actions have helped to keep the real estate industry afloat along with home values.  During the pandemic however, we have seen liquidity crunches coupled with investors not as eager to take on paper.   Several Jumbo Investors and Non-Qualified Mortgage Investors suspended products in Mid-March.  Thankfully with stabilizing financial markets, many of these programs are back.  The Federal Government also stepped up and offered some assistance regarding temporary payment suspension.  Many American’s were able to utilize forbearance options offered by most financial institutions.  The Covid-19 pandemic continues.  What is next in financial markets is anyone’s guess. 

With 30- year rates continuing to hover below 3%, the refinance and purchase market is exceptionally strong.  Americans who have been fortunate to continue employment during this time, have been able to take advantage.  The purchase market remains quite competitive.  We as lenders have had to be creative with financing in order to help our clients receive offers accepted.  Calling listing agents, removing contingencies, bridge lending, adding co-signors, full approvals before offer, strong pre-approval letters are all tools that are being employed to assist our buyers.  With uncertain political and economic climates, it is difficult to predict the future purchase market.  The supply of buyers is bursting at the seams, however.  If rates remain reasonably low, I do believe the purchase market will be strong for some time. Let’s get some listings! 

The record volumes have come at a cost.  A huge labor shortage has been created in the mortgage industry.  Overtime, hiring costs, lost servicing, are all greatly impacting the profitability and compressing margins (profits).  In a response to Covid-19, regulation now requires lenders to reverify income and assets right ahead of closing causing more underwriting expense. Fannie Mae and Freddie Mac have just recently announced a 50-basis point cost on all mortgage refinance applications.  On a $300,000 refinance, that would be an added cost of $1,500 as an example.  Consumers have the option of either paying the cost or settling for a touch higher interest rate.  Any loan delivered to Fannie Mae or Freddie Mac September 1st or after, is subject to the added fee.  Many lenders are locking refinances on 60,75,90 days to help accommodate volume.  Closings in September and October were locked in before September 1st on the refinance side not passing the new fee onto consumers.  The mortgage industry will be charged the fee for delivery.  This retroactive legislative action is expected to cost mortgage companies and financial companies millions of dollars. 

Through the years, Restaino and Associates has been a trusted partner in Real Estate.  I appreciate the continued friendships and partnerships with so many of you. Our industry really does have a bright future specifically in the Greater Madison area.  Our market is going to experience exponential growth in the coming years.  Mortgage products and programs continue to be quite expansive offering many buyers wonderful opportunity.  Regardless of the outcome of the Presidential Election, interest rates should remain quite reasonable.  Baby Boomers will be selling once Covid passes and construction will surge.  Again, thank you for allowing me to share some insight with you.  I am available to assist and help meet clients’ needs.  Do not hesitate to reach out with questions or concerns.  I offer a wide variety of mortgage products:

-Fannie Mae and Freddie Mac Conventional


-Jumbo and Non-QM products


-Condo, Single Family, multi-family Investment products

 -We underwrite and service almost all our mortgages in house.

I invite you to visit my website to learn more.