The surge in mortgage refinancing applications in 2019, led by prolonged falling interest rates in the United States, has work piling up for the mortgage brokers who are processing them.
Compared to a year ago this past week, refinancing applications were up an incredible 116%, according to the Mortgage Bankers Association.
With the 30-year fixed mortgage rate at around 3.6%, a three-year low, many homeowners are looking to lock in at that lower rate.
As CNBC reported recently, Quicken Loans saw its best quarterly earnings in its 34-year history, at $32 billion. The company originated more than $11 billion in mortgage volume in June.
To absorb all of the work, Quicken is planning to hire 1,300 new employees.
After the Federal Reserve cut interest rates, the forecast for mortgage rates appears to remain on track through the coming year.
Millennials were especially reactive to the rate drop. In June 2018, just 8% of millennial mortgage applications were to refinance; the rest were to buy a home. This June that jumped to 14%Ellie Mae
Much of this trend in refinancing has been spurred by millennials.
The upshot of the high volume of applications is that customers are seeing longer wait times for them to be processed. What might normally take 30 days can sometimes drag up to 45 in the current climate. One mortgage broker in Washington, D.C. reported working heavy weekend hours and perusing resumes to search for help with the influx of refinancing applications, according to Bloomberg.
One reason the market may be struggling to absorb this volume could be that Wall Street banks cut back their mortgage units in recent years. Smaller brokerages are picking up the slack. Combined with the seasonal summer effect of housing market activity, these companies are facing a crunch.
There are a number factors to consider when making a decision about refinancing, which comes with upfront costs. While low rates are a great incentive to do so, other financial goals and calculations need to be weighed. At the moment, American homeowners are betting heavily on the benefits of refinancing.