Twin Cities mortgage offices crazy busy as low rates spark refi rush

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It's a mad scramble in Steve Furlong's mortgage office in Bloomington these days — everyone, from the loan officers to the underwriters, are working late and they're working weekends.

"We're as busy as I've ever been in March," said Steve Furlong, mortgage specialist with Mortgages Unlimited in Bloomington and past-president of the Minnesota Mortgage Association.

Mortgage interest rates dropped this week to the lowest level on record, fueling an already hot spring housing market and triggering a refinance boom in the Twin Cities metro.

On Thursday the average 30-year fixed-rate mortgage fell to a new low: 3.29%, according to a weekly survey by Freddie Mac. That was the lowest rate in Freddie Mac's nearly 50-year history and more than a full percentage point lower than last year at this time.

The declines have been a boon to spring homebuyers, but have also created an unexpected opportunity for homeowners to refinance their mortgages. That's especially true for people who bought a year ago when rates were more than a percentage point higher.

The spread of the coronavirus — and the illness it causes, COVID-19 — has roiled financial markets, sending investors to the safety of bonds. In the wake of a stock sell off this week, the yield on 10-year Treasury bonds slip below 1% for the first time. Mortgage rates are loosely tied to bond yields.

The Mortgage Bankers Association said that during the last week of February mortgage applications were up 10% compared with a year ago, while refinance applications increased 224%

"I've been in this business for 30 years and I've nearly seen anything like it before, we've had some refi booms, but we've never been this low," said Cyndi Garza, vice president of sales for Union Home Mortgage, an independent national broker that has two branches in the Twin Cities.

The general rule of thumb is that it makes sense to refinance when a homeowner can reduce their mortgage rate by 1 percentage point, but Garza said she's seeing applications from people who bought just a couple of months ago, including some who have earned enough equity to drop their mortgage insurance.

"We don't know how long it will last, so we are trying to work as hard and as fast as we can," she said.

Uncertainty about the spread of the virus and its impact on the economy is unlikely to go away anytime soon, so experts expect rates to hover near all-time lows at least in the coming weeks.

While low mortgage rates are always sign of underlying economic turbulence, the uncertainties surrounding both COVID-19 and the upcoming presidential election, have made the situation particularly complex.

Keith Gumbinger, vice president at, said the deeper the markets fall and the lower rates go, the greater the chance of a sharp economic turnaround that could be triggered by a coordinated central bank move or a breakthrough in containment or treatment. Even a slowing in the rate of expansion of the virus might be enough to see a sudden change in direction for stocks and bonds yield, said Gumbinger.

"It's a shame all this is happening in more ways than one," he said. "If not for the 'panic-demic' in markets we would likely be talking about firming interest rates as the economic picture has generally been brightening."

Declines in rates come at a time when housing market in the Twin Cities is already in a frenzy — the spring market came earlier and is more frenetic than normal. Pending sales are up double-digits and with buyers outpacing sellers in some areas, buyers are outbidding one another and offering sellers more than their asking price.

Joshua Clark, an economist with Zillow, said so far volatility in the stock market alone hasn't had a noticeable impact on housing, and even declines in rates aren't going to have a major impact.

"The decision to move is not a financial one for most people, it's because of a new job or a growing family, perhaps," he said. "If mortgage rates move in either direction due to a change in the stock market, that will have an impact on buyer demand to some degree, but the overall impact is likely to be limited."

Furlong, the Bloomington-based mortgage broker, said about 80% of his applications last March for were for purchases, and the rest were for refinancings; this year that ration is now 60% refinancings and 40% were for purchases.

He said with staff working extended hours, they're keeping up with demand.

"And that's not just lenders, but also appraisers and title companies and even Realtors, we're are all going to be stretched a little thin in our industry," he said. "Things are taking a little longer."

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