Refinance Mortgage Rates: Lenders Speed Refis To The Closing Table
Homeowners in need of a fast refinance are in luck.
Today’s mortgage rates are still ultra-low, but somewhat higher than they were. Millions of homeowners are now “out of the money” to refinance.
But that’s good news for homeowners that were dreading months-long wait times at their lender. The refinancing market has slowed. Lenders are closing refinance transactions fast.
And homeowners are still finding value in refinancing.
Many are canceling FHA MIP with a conventional refinance. Others are putting their home equity to work via popular cash-out programs.
There are now few excuses not to refinance. Lenders are getting more eager for refinance business by the day. They are willing to negotiate. That could mean lower rates, lower costs, and higher value for the homeowner.
There have been few better times in history to be looking to refi.
“Days To Refinance” Drops To 47 Days
Today’s refinance mortgage rates are helping homeowners close their refinances faster.
Through 2015 and 2016, mortgage rates hit all-time lows. That spurred a refinance mini-boom that sent lenders scrambling.
More loan applications were coming in than they could handle. The days to close a refinance jumped to more than 50 days, according to loan software company Ellie Mae, which tracks more than 3 million loan applications per year.
To make matters worse, post-election mortgage rates skyrocketed in 2016. Homeowners applied for refinances like few times in history.
Lenders were anything but prepared.
Days to close a refinance jumped to a 4-year high at 53 days, according to Ellie Mae’s Origination Insight Report. Not since 2012 had a refinance taken so long.
But the upside was that, eventually, higher rates led to faster closing times. According to Ellie Mae, it took just 47 days to close a refinance in February, down six days from the month before.
And, fortunately for homeowners, faster closing times can compensate for higher rates.
Rising Rates Have Lowered Rates 12.5 Basis Points (0.125%)
Lenders now require 47 days, on average, to close a refinance.
For consumers, this is good news and here’s why: mortgage rates are often quoted in 15-day “windows”, and with each additional 15-day window, the quoted rate increases.
Just last month, a 45-day lock may have been too short to complete the refinance. Closings took 53 days — sometimes much longer with problems or delays with the file.
A 60-day lock would be needed, at a cost of 0.125% of the loan amount. That’s more than $430 on a $350,000 refinance.
Mortgage rates move approximately 12.5 basis points (0.125%) with each 15-day change :
- 15-day rate lock : -0.125 percentage points from the 30-day rate lock
- 30-day rate lock : The rate lock standard
- 45-day rate lock : +0.125 percentage points from the 30-day rate lock
- 60-day rate lock : +0.250 percentage points from the 30-day rate lock
With the average refinance now requiring 47 days, today’s refinancing homeowners have a decent shot at 45-day lock pricing. They could even score a 30-day lock if they delay their lock-in a week or two after they apply.
Locking a mortgage rate just last month may have required an extra 0.125% to 0.25% in fees for a 60-day lock.
Therefore, today’s higher rates may not be as high as they look. Refinance speed is higher, and lenders — increasingly desperate for refinance business — are eager to rush loans to the closing table.