LendingTree’s latest report on U.S. home refinancing activity finds that the COVID-19 coronavirus pandemic has led to unprecedented volatility in mortgage interest rates and, in turn, a huge surge in borrower demand.
The volume of refinance mortgage applications that channeled through LendingTree’s marketplace has tripled from a year ago in each of the 50 largest cities and in all but five states, the company says.
“A mortgage refinance, particularly at these historically low rates, presents an attractive opportunity for homeowners amid economic uncertainty,” says Tendayi Kapfidze, LendingTree’s chief economist.
“Compared to a year ago, when rates were one percentage point higher, consumers save nearly $60 per month – or $700 per year – in payments for every $100,000 borrowed. Interest savings add up to about $20,000 over the 30-year term of a typical mortgage,” Kapfidze adds.
States and cities with higher average credit scores and greater home-price appreciation are better positioned to take advantage of the historic refinance opportunity. The improvement in the balance sheets of those households could potentially help some areas recover more robustly when the economic crisis induced by the coronavirus ends.
San Francisco and Raleigh, N.C., lead cities with the most growth in refinance loan requests, which increased 417% and 406%, respectively.
San Jose, San Diego and Los Angeles were all in the top 10, with refinance inquiries growing 394%, 360% and 345%, respectively, from last year.
Nebraska had the fastest growth of all states, according to LendingTree. Applications were up 338%, leading the nine states with growth rates above 300%
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