Refinance rates vary significantly from lenders as banks see mortgage applications surge

Consumers shopping for the best mortgage refinance rates could be in for a suprise if they limit their search to their existing servicing company. The surge of mortgage applications over the past month due to historically low interest rates has had an unusual impact on the market. Numerous banks are raising their margins (profit) on the mortgages that they offer as they have a huge spike in business and in many cases have limited capacity to underwrite the new loans.

The mortgage industry has always been one that has directly grown or shrunk due to interest rates, consumer demand and loan volume. The surge in applications due to the low rates has been a radical change for the market that saw interest rates well above six percent during the summer of 2008 and consumers sharply pulling back on home refinances as home values and equity eroded. The new surge of applications also will intensify the underwriting guidelines as lenders are wary of making any exceptions to candidates who lack the credit, income or collateral to meet all of the loan guidelines. Banks are in a position where they can be ultra selective to the loans that they are going to be adding to their servicing portfolios. The major lesson to learn is that if you are shopping for a refinance mortgage loan then it is critically important to obtain quotes from more than one mortgage lender to ensure you receive the best loan terms.