Amy Haenner, a broker at Legacy Lending Group in Fort Wayne, Indiana, is processing eight mortgages this week. None of them are for home purchases.
A year ago, her business was evenly split between home- purchase loans and refinancings that reduce interest rates on existing mortgages. That’s changed as a slowing U.S. economy curtails buying demand and encourages current owners to save cash by locking in near-record-low borrowing costs, she said.
About $783 billion of mortgages will be refinanced in 2011, according to a forecast released at this week’s Mortgage Bankers Association conference in Chicago. The projection is more than double the group’s estimate of $352 billion at the beginning of the year. Refinanced mortgages now account for 85 percent of home-loan originations, up from 70 percent six months ago.
The refinancing boom is combining with a U.S. jobless rate above 9 percent and a surplus of distressed properties to limit buyer demand for houses. People who refinance usually remain in a home for at least the time it takes to recoup fees and start seeing the benefit of a lower interest rate, and many stay longer as savings kick in. The National Association of Realtors estimates that homeowners now stay at the same address for at least a decade, compared with a 2006 average of six years.
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