Once-in-a-generation refinance market has arrived; US mortgage market is currently valued at $11T with consumers having the highest credit quality and lowest loan to values in history
The current market, as foreseen by loanDepot CEO Anthony Hsieh years ago, may create consumer demand that outpaces industry-wide production capacity by double or more in the very near future
Mar 4, 2020
FOOTHILL RANCH, Calif., March 4, 2020 /PRNewswire/ -- As the 10-Year Treasury yield broke below 1% for the first time ever, loanDepot CEO Anthony Hsieh, cautions that while this may be the best of times for US homeowners, the market could prove to be problematic for the home lending industry as a whole.
"This is the biggest refinance rally in the history of our country," said Hsieh. "It's unprecedented. There could be $4-5T 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."
"The current market conditions can create exceptional opportunities for consumers," continued Hsieh,"but I think it's going to be critical for consumers to be very knowledgeable and, importantly, very patient. 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 foreseen overall industry capacity constraints, Hsieh encourages consumers to take advantage of all that this market may offer by working with reputable lenders of scale who have the elasticity and resources to effectively address spikes in volume, while continuing to give customers exceptional service and reasonable closing times.
"This market is going to create a unique moment," said Hsieh. "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. 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."
Roughly 80% of US homeowners are currently 'in the money' so to speak, and able to take advantage of what the current market offers. To help make the upcoming refinance spike as personally optimized as possible, consumers should make sure they have clear goals in mind, have documents gathered and speak with a knowledgeable, licensed lending officer who can provide honest and transparent information about the timeframes within which transactions can be completed and benefits realized.
"And, above all," Hsieh opines, "consumers should be prepared to be patient as they take advantage of this fantastic, wild ride."
An innovator since its inception in 2010, loanDepot continues to disrupt the lending industry with its focus on creating the technologies needed to deliver seamless borrowing experiences to its customers. loanDepot debuted the industry's first end-to-end fully digital loan, the mello smartloan™, in 2019. The Company has funded over $202 billion since its founding, and currently ranks as the second largest nonbank lender and one of the leading retail mortgage lenders in the U.S. NMLS #174457
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