The Federal Reserve’s interest rate cuts and government economic stimulus have given our economy a pure sugar rush. One of the early manifestations of this ‘sugar high’ can be found in the mortgage market’s surge of refinancing activity.
Traditional mortgage refinances are 50% higher than a year ago according to the Mortgage Bankers Association. Home Equity Conversion Mortgage refinance transactions also climbed from an average of 5.4% in 2019 to an average of 20% of all FHA case numbers issued for the federally-insured reverse mortgage. In fact, August set a new high for refinance activity with 36% of all HECM case numbers being HECM-to-HECM refis transactions.
Against this backdrop fiscal year 2020 endorsements for the HECM grew 34% over 2019. A considerable part of that increase can be attributed to this new yet anticipated spike in HECM refinance activity.