Right when the purchase-mortgage market was poised to start crowding out refinances, the stars may have aligned to pump up refi activity yet again. Credit union mortgage professionals and marketers can act now.
You may have heard that the “adverse market refinance fee” the Federal Housing Finance Agency (FHFA) was charging since December of 2020 was eliminated as of Aug. 1st, 2021. That knocks off $1,400 from any mortgage being delivered to Fannie Mae and Freddie Mac for borrowers exhibiting certain characteristics. This could make it even more worth it to refinance for some of your members.
Additionally, average interest rates on mortgages have been trending lower recently. The historically low range we experienced last year of 2.75 – 3.5 percent for many types of refinance mortgages is now back.
It was reported in July by mortgage analytics firm Black Knight Inc. that nearly 14 million U.S. homeowners are still eligible to refinance their mortgage at a lower interest rate. The average household’s potential mortgage-payment refi savings is $293 per month.
Now is the time to reach out to members who are refi and prospective refi candidates:
- Emphasize the elimination of the FHFA’s adverse market refinance fee in your marketing. Tell them the government-backed players, Fannie Mae and Freddie Mac are doing better than expected since the number of U.S. homeowners in COVID-19 forbearance has only continued to drop.
- Creatively show them how they can either save money each month or shave months, if not years, off the life of their mortgage.
- Make sure they know their options. Does a member need a traditional refi or a cash-out refi? And how would you tweak this message to candidates who have good home equity versus great home equity? Adjust your marketing message appropriately.
- Point out that a traditional and/or cash-out refi can help them consolidate other debts and get ahead in life. And if they happen to have a HELOC (home equity line of credit) they want to pay down or pay off, a cash-out refi might just be the way to go.
- Don’t forget the special refinancing programs, Refi Possible by Freddie Mac and RefiNow by Fannie Mae and how they can help eligible homeowners refinance if they make at or below 80 percent of their local region’s median annual income. Their mortgage rate could be reduced by a half-percentage point or more.
No one knows how long this new refinance wave will last so now is the time to act for credit union mortgage departments, loan officers, and others in the field.