TEXT OF STORY
Bob Moon: There’s word this morning that mortgage applications jumped last week. The Mortgage Bankers Association reports record-low interest rates spurred a 32 percent surge in demand for home refinancing loans. The association predicts refinancings will more than double this year to the tune of nearly $2 trillion. As Amanda Aronczyk reports, that means lots and lots of processing fees from lenders.
Amanda Aronczyk: Back in the pre-subprime days, your broker might have offered you a competitive mortgage rate and “low, low fees!” But now, refinancing is in such high demand, there’s less incentive to lower those fees.
Jay Brinkmann is chief economist at the Mortgage Bankers Association. He says higher fees are good news for banks:
Jay Brinkmann: They make money on the volume of loans that they push through, so it should be a pretty good year then for large institutions like JP Morgan Chase, Citi and Bank of America.
Fees vary from bank to bank. So how do you know if you’re getting a good deal?
Brinkmann: The important thing is for a consumer to ask: What are those fees going to be? What are you going to charge me at closing? And so they can get a full apples to apples comparison.
But these days, homeowners may have a tough time getting quick refinancing. Demand is so high, banks are slow to process all requests. Still, Brinkmann says don’t panic. Interest rates should stay low for a good, long time.
I’m Amanda Aronczyk for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.