Finally.
The first 11 months of 2008 saw an unprecedented contraction of the mortgage lending business as nationwide credit and real estate markets soured. But for the last four weeks, lenders have been working around the clock, taking advantage of historically low interest rates and refinancing mortgages.
The refi boom has brought growth to the mortgage business – and brought real estate appraisers along for the ride.
“In two days, we’re generating more business than we would a whole month earlier this year,” said James Madigan, president of Leader Mortgage in Arlington. “The industry was so flat for so long, we all paired back our staff. Now we are having to update the equipment on computers that haven’t been used for three years.
“But we’re not complaining.”
Madigan has increased his staff by 25 percent in the last four weeks, and said he will continue to hire as long as the volume increases. As it is, his employees are working until 10 p.m. some nights, and processing refi requests on Saturdays and Sundays.
Now Hiring?
The boost started on Dec. 17, after the December meeting where the Federal Reserve committed to buying $500 billion in mortgage-backed securities and rates dipped drastically, as low as 4.5 percent. Rates have fluctuated since then and are currently hovering around 5.25 percent, but business hasn’t slowed.
Amy Tierce, president of Fairway New England Mortgage, said unlike the brief refi blip the industry saw in January 2008, this boom is likely to stick around a lot longer, with the Federal Reserve’s plan beginning this month.
“I think we have at least until June with a low-rate environment, probably longer,” Tierce said.
Tierce has also hired staff to cope with the torrent of loan volume in the last month, and her 12 originators are working 12-hour days – and Saturdays.
“There are so many fewer lenders in the business,” Tierce said. “[For] those of us who have survived the last three years, the refi opportunities are going to continue for us much longer, because we’re also getting a ton of referrals. There is a bigger slice of the pie for those of us who are left.”
Tierce said the secondary market is swamped with the amount refinance volume, and when rates jump suddenly, it’s because wholesale lenders are trying to slow things down.
“There are a lot of moving parts in this refi world right now,” Tierce said. “The volume issues are just going to continue to move to the forefront.”
Regardless of volume issues, Tierce is hopeful this refi boom is a sign the economy is beginning to turn around. Better rates are putting cash into people’s pockets.
“I’m seeing people who are saving $200 or $300 a month on their mortgage payment, and that’s like a raise,” Tierce said. “That has to help the economy in the long run.”
Don’t Forget The Appraisers!
Working hand-in-glove with the mortgage lenders, appraisers have had a windfall of their own revaluing homes for refis. As soon as the rates dropped in December and the mortgage business got its kick start, so did residential appraising.
“All of a sudden we were seeing the number of orders go up [in mid-December],” said Richard Goulet, president of The Appraisers Group in Belmont. “It’s been going up every week since that time. Since the refi boom has occurred, our business has effectively doubled.”
Goulet has added three people to his staff to cope with the new business, but he isn’t complaining either. The best news is that the refinance boom isn’t going to stop any time soon.
“We’re going to have at least six or eight months of this activity,” he said. “It’s a lot of work, but a lot of people are getting help and that’s key.”
