Refinance

While the mortgage market began the year healthy, lenders and borrowers need to prepare for the impacts of the coming coronavirus recession.

Refinancing activity is surging, existing borrowers are inquiring about loan modifications, loan closings are being delayed by more complex credit checks — and banks are short on people to handle it all.

It has all the trappings of a routine mortgage refinance closing. The mortgage broker, the lawyer and the homeowner, all signing off on the paperwork that will cut the interest rate on a home.

Mortgage rates rose sharply this week as originators looked to manage the overwhelming demand from consumers, according to Freddie Mac.

Mortgage application volume decreased 8.4% compared with one week earlier as lenders managed activity by raising rates even as 10-year Treasury yields fell below 1%, according to the Mortgage Bankers Association.

With small businesses feeling the financial scourge of the coronavirus, bridge loans could be the direction they turn to keep things afloat.

Electronic closings are a solution in efforts to limit people congregating, but there could be some state law concerns.

Increased refinancing volume led Fannie Mae to raise its 2020 estimate by $300 billion and 2021 projection by $280 billion.

Companies in the mortgage business were already focused on processing a lot of loans and generating efficiencies before the latest uptick in business hit.

Paradoxically, mortgage rates actually increased this past week, even as the 10-year Treasury yield plumbed new depths, likely because lenders are too busy to handle the influx of applications.