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As the ReFi Boom Slows, Here’s How To Refill Your Pipeline

December 7, 2021
Worried about rising mortgage rates? Here are 6 non-QM mortgage programs for those who fall outside of conforming guidelines.

The coronavirus pandemic ushered in a new era of sub-3% mortgage rates, and — no surprise — a refinancing boom followed. The historically high levels of refi activity throughout 2020 and 2021 were a win-win. Homeowners saved more than $1.3 billion per month — and, as mortgage rates plunged to an all-time low of 2.65% in early 2021, according to Freddie Mac’s weekly survey, mortgage brokers had all the refi business they could handle.

The refi party is ending, though. As the economy recovered from the pandemic, the Federal Reserve in November began winding down its purchases of mortgage-backed securities. With inflation now a clear and present danger, the Fed has hinted it will raise interest rates in 2022. As a result, mortgage rates had risen to 3.1% as of mid-November, an increase of 45 basis points from earlier in the year.

With rates expected to keep climbing, the Mortgage Bankers Association has predicted a sharp decline in refi activity in 2022. However, the trade group also anticipates purchase activity will remain strong next year. That shift presents an opportunity for mortgage brokers who are willing and able to seize it.

As the door closes on the refi boom, it’s time to open the window on non-QM lending for your clients. The good news? Home sales volumes are strong. The National Association of Realtors says existing home sales hit an annual pace of 6.34 million units in October, a brisk cadence that defied tight inventories of homes for sale and ever-rising prices. Millennials, a huge demographic sector, are also aging into their prime home-buying years.

As you shift your focus from refi’s to the purchase market, it is imperative that you provide resources for clients who fall outside of the conforming guidelines. LendSure’s account executives specialize in non-QM loan programs:

Two-, 12- and 24-month bank statement loans. Business owners and self-employed borrowers don’t fit neatly into the guidelines of Fannie Mae and Freddie Mac — but they’re still creditworthy.

Just-missed agency (Alt-A). Lenders are imposing strict requirements on borrowers, and the typical credit score for conventional borrowers is near 800. That leaves many legitimate borrowers out of luck.

Property investor loans. The housing boom has spurred strong interest in investment properties. The National Association of Realtors reports that these buyers accounted for 17% of U.S. home sales in October.

Foreign national programs. Non-residents finally are being allowed into the United States again, and the looser travel restrictions are spurring new demand from foreign buyers.

Fix & Flip construction programs. Many investors are buying properties in need of repair, rehabbing those properties to either sell or rent. Our Fix & Flip loan programs cover both the sell and rent scenario.

Jumbo loans. The Federal Housing Finance Agency boosted the jumbo loan limit to record levels for 2022. Even so, strong price appreciation means many purchase loans are above the conforming limits.

All of these situations spell opportunity for brokers looking to keep their pipelines full through the holidays and into 2022. If you have an outside-the-box loan scenario, contact us today. Our LendSure account executives will do what it takes to help you close the loan and get your client into the home of their dreams.

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