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Mortgage rates are at an all-time low. Here’s how the biggest lenders are handling it

Lenders share insight on what’s happening at ground level

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Freddie Mac’s mortgage rate report, considered to be the gold standard in the mortgage industry, goes back nearly 50 years. And in that half century, mortgage rates have never been as low as they are right now.

Freddie’s latest report, which came out Thursday morning, shows that mortgage rates are now at 3.29%. The previous low was 3.31% in November 2012.

The drop to record lows tracks with what several lenders told HousingWire last week: that borrowers were getting lower interest rates than they’ve ever seen before.

But in the last week, coronavirus fears caused bond investors to seek the safety of U.S. mortgages and other financial instruments, leading mortgage rates to drop even further.

Now, rates are below 3.3%, a level that’s never been seen before. And mortgage companies across the country are experiencing a surge in mortgage demand unlike any they’ve ever seen before.

HousingWire spoke with nearly a dozen lenders this week, including many of the biggest lenders in the country, and nearly all said that they’ve never seen a lending environment like the one that’s happening right now.

That’s definitely the case at the nation’s largest lender, Quicken Loans.

“We’re breaking records every day right now. We are right there or below our all-time lows in interest rates. Our volumes are spiking. Our refinance volume is spiking rapidly. It’s incredibly busy. It’s going well,” Quicken Loans President and Chief Operating Officer Bob Walters said.

Several lenders suggested that some of their competitors may face capacity issues in the current interest rate environment, where lenders may not be able to handle all the loan volume they’re seeing and may be forced to keep rates slightly higher to stem the rush.

But Walters said that Quicken Loans is more than prepared thanks to the company’s investment in technology of the last few years, specifically the technology powering the lender’s Rocket Mortgage digital mortgage experience.

“We as an industry can hit capacity very quickly with rates this low. Getting into the process and getting through the process may become more difficult for some borrowers,” Walters said.

“What we’ve spent a decade building is a highly flexible and scalable system. In a traditional system, you can’t hire fast enough to deal with this kind of demand,” Walters said. “This is the payoff on all the investment we’ve made in the last decade. A lot of the work is being done by the client. And that’s what they want.”

In terms of dealing with the increased volume, Quicken Loans is already making other moves. The company recently “paused” the operations of One Reverse Mortgage, one of the biggest reverse mortgage companies in the nation, and shifted all of the company’s employees over to Rocket Mortgage.

But Quicken Loans isn’t the only company taking these steps.

JPMorgan Chase also recently moved half of its home equity lending team to purchase mortgages to deal with the demand.

But that’s not the only move the bank is making.

According to Chase Home Lending Chief Marketing Officer Amy Bonitatibus, the bank is also pausing on some marketing campaigns in the wake of the rising demand.

“We’ve paused email marketing campaigns on refinancing due to the thousands of customers who are already aware of the low rates and applying for them on,” Bonitatibus said.

The company believes it is still able to fulfill mortgages as quickly or even quicker than before. That’s why Chase increased its closing guarantee from $1,000 to $2,500.

According to Bonitatibus, once a borrower has all their mortgage documents in, Chase is guaranteeing that it will close their loan in 21 days or the bank will give them $2,500 in cash.

Bonitatibus said that Chase, like other lenders, is able to give borrowers all-time lows in mortgage rates right now.

“The rate environment was already low. And now, it’s much lower,” Bonitatibus said.

Bonitatibus also said the bank is seeing a sizeable surge in refinances and purchase mortgages.

“Thousands of customers this week alone have inquired about both refinancing and purchasing,” Bonitatibus said.

With the moves that Chase has made and the company’s increased focus on technology, Bonitatibus said that the bank feels it is prepared to thrive in the low interest rate environment.

“We feel great about the current situation.” Bonitatibus said. “We launched our digital mortgage experience in the fall. And it’s working great so far. We’re getting a great response from borrowers.”

Things seem much the same at Wells Fargo.

“Like everyone, we are seeing an increase in mortgage application volume driven by lower rates,” Wells Fargo Spokesperson Tom Goyda told HousingWire. “In order to help provide the best possible service to our customers, we continue to hire underwriters, processors and closers into our fulfillment group and we’re also executing on opportunities to shift team members from other non-fulfillment groups into our fulfillment operation.”

Meanwhile, growing wholesale giant United Wholesale Mortgage is also seeing record lows on interest rates and record highs in volume.

Alex Elezaj, chief strategy officer for UWM, said that some borrowers are even seeing mortgage rates as low as 2.75% for a 30-year mortgage right now. And the mortgage demand is breaking records.

“We are topping our own records daily and weekly,” Elezaj said. “In some cases, we’re seeing twofold increases.”

Elezaj added that in the last week alone, the company has had several days with more than $2 billion in locked loan volume.

“We are seeing a recent surge in refinances based on the lower interest rate environment that we are in, the rise in home values, and the fact that more and more consumers are using independent mortgage brokers for their mortgage needs,” Elezaj said.

But it’s not just refinance volume that’s up, as one might expect given record lows in interest rates. Purchase mortgages are still coming in too.

“The dollar amount of purchase loans is the same or slightly above where it’s been,” Walters told HousingWire.

That’s the case as well at Guaranteed Rate, one of the largest consumer-direct lenders in the country.

“Historically low rates are contributing to a massive surge in mortgage applications. Thanks to having the best people and technology in the industry, we’re more than able to handle the volume,” Guaranteed Rate CEO Victor Ciardelli said.

“Our numbers are breaking all-time company records. Last month, we did $6.8 billion in total locked volume,” Ciardelli added. “Purchase volume also recently surged to double last year’s pace. We’re working hard and fast to make sure that our customers can close on their loans quickly and seamlessly.”

But Guaranteed Rate isn’t the only consumer-facing lender that’s breaking its own records. loanDepot is in the very same boat.

“There is no doubt that in this market we are seeing all-time low rates for borrowers which has created record lock and application months for loanDepot,” loanDepot Senior Vice President of Production Alec Hanson told HousingWire.

“Historic low rates provide incredible opportunities for existing homebuyers to explore reducing their mortgage payments through refinancing. They also provide exceptional opportunities for homebuyers to maximize their buying power in this market,” Hanson continued.

But Hanson cautioned on the capacity issue that the mortgage industry is facing and encouraged borrowers to choose the lender that can be deliver what it promises.

Hanson’s boss went even further. LoanDepot CEO Anthony Hsieh took the unusual step Thursday of issuing a press release that addressed the lending environment head-on.

“This is the biggest refinance rally in the history of our country,” Hsieh in the press release. “It’s unprecedented. There could be $4-5 trillion of demand this year, and, obviously, this cycle is not one that we have seen before. The market size, coupled with the credit quality of consumers, will likely create industry whiplash, in so much as industry lending capacity will not be able to equal consumer refinance demand.”

Hsieh, like Hanson, cautioned that borrowers need to keep their eyes open when dealing with their lender.

“The current market conditions can create exceptional opportunities for consumers, but I think it’s going to be critical for consumers to be very knowledgeable and, importantly, very patient,” Hsieh said. “The analogy I would use is this: when you are using shared Wi-Fi at an airport, sometimes speed can be slowed because everyone around you is trying to use the same services. This market is unpredictable, but upcoming capacity demand for refinance may create a similar, slowed experience.”

Despite that, Hsieh has high hopes for the next few months.

“This market is going to create a unique moment. The market and these interest rates will create dinner conversation in homes all across America. These conversations will drive refinance volume to all lenders, even without large advertising spend and campaigns,” Hsieh said.

“Given this, lenders who cannot scale, and those that do not have the wisdom to responsibly approach this market, will be over capacity within the next 60-90 days,” Hsieh added. “And, above all, consumers should be prepared to be patient as they take advantage of this fantastic, wild ride.”

LoanDepot wasn’t the only lender encouraging caution from borrowers and raising extended loan cycle times as a potential concern.

“First, we are compassionate to those affected by illness due to COVID-19, we also are prepared to serve both our clients and employees and not push turn times out to 50+days doing so,” Wyndham Capital Mortgage CEO Jeff Douglas told HousingWire.

“When mortgage rates fall dramatically like they have now, many traditional lenders take in more business than they can service,” Douglas added. “Today, consumers will be better served by choosing a fintech mortgage lender, who has automated their workflows and provides online convenience. With a fintech mortgage lender, consumer will find better value, service, and convenience during this unprecedented time.”

Meanwhile, the surge isn’t limited to refis alone. Movement Mortgage, which traditionally focuses more on purchase mortgages than refis, is seeing increases across the board right now.

“Monday we set a new record for locked loan volume. That momentum has continued throughout the week,” Movement Spokesperson Adam O’Daniel told HousingWire. “We have an ‘all hands on deck’ attitude. Our lock desk has worked pretty much around the clock all week.”

According to O’Daniel, in a regular market, Movement’s business is roughly 85%-90% purchase. But that has shifted given the conditions of the market.

“We have a big focus on serving our customers like they’re our own family members. When rates are this low, it makes sense to work with refi customers,” O’Daniel said. “We have seen a strong increase in refis. Our refi business has significantly increased. But purchase still makes up more than half of our volume.”

That’s because the decrease in rates makes homeownership more affordable for borrowers.

“This creates an affordability conversation as well,” O’Daniel said.

And while Movement doesn’t comment specifically on its own mortgage rate information, O’Daniel told HousingWire that the lender is “seeing the same trend in rates that everyone else is” on rates.

The impact of the low interest rate environment hasn’t just been seen in the last week alone, O’Daniel said.

“We were already expecting a strong start to the year,” O’Daniel said. “We had the best January and February ever already this year.”

O’Daniel also said that the company is expanding its “Movement University” training program, which focuses on hiring and training new employees, from one class during the spring to two and perhaps three.

Other lenders are breaking their own lending records too.

“Like all mortgagees, we are very busy,” Fairway Mortgage CEO Steve Jacobson said. “We’re taking it one day at a time and helping as many as we can. Our locks are up over 132% over last year on the same date. We’re grateful to be busy.”

Things are much the same at Flagstar.

Flagstar Senior Vice President of Direct Lending Rocky Stubbs said that the bank is seeing records across all mortgage channels.

“We are seeing and quoting rates that represent all-time lows. It’s a massive surge in refis right now,” Stubbs said. “We are setting all-time volume and application volume records in the direct-to-consumer channel.”

In fact, Stubbs said that Wednesday was the highest volume of applications on any day in the history of Flagstar’s direct-to-consumer channel. “We are hiring every talented person we can across all business channels,” Stubbs said. “All areas are growing.”

Fifth Third Bank is also seeing record-breaking volume of late. A spokesperson for the bank told HousingWire that the bank has seen its overall volume of mortgage applications increase by 100% in the last week.

And while the massive increases in mortgage demand are great, none of it matters if the mortgage business can’t handle the surge, as many lenders noted.

Those that are prepared and able to expand either with technology or people (or both) will be ones that will be able to fully capitalize on this rush that seemingly has no signs of slowing down.

Let the good times roll, right?

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