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With mortgage rates at record lows, banks and brokers scramble to deal with refinancing rush

One mortgage company received more than $4 billion in applications over one weekend.
Image: Recently finished homes and unfinished lots in Rancho Cucamonga, Calif., in 2008.
Recently finished homes and unfinished lots in Rancho Cucamonga, Calif., in 2008.David McNew / Getty Images file

The country’s volatile stock market has a silver lining for homeowners -- record low rates.

Wall Street investors buying up bonds and Treasury bills have caused mortgage rates to drop dramatically. The current rate for a 30-year fixed mortgage is 3.47 percent, a rate last seen in December 2012, when the European debt crisis drove rates down, according to the Mortgage Bankers Association, a national association representing the real estate finance industry.

The rate drop has led to a surge in mortgage applications. The volume of applications increased around 55 percent last week from the week before, according to the group’s seasonally adjusted index. About 77 percent of those were refinance applications, according to the group.

“Since last summer the refinance volume has been strong,” said Mike Fratantoni, chief economist with the Mortgage Bankers Association. “It was more of a low boil.”

“Rates are to the point where now anybody who has received a mortgage is eligible to improve their rates."

Mortgage brokers and lenders have been overwhelmed with applications. Quicken Loans, which owns about 6 percent of the mortgage market, received more than $4 billion in applications between Friday and Sunday -- the largest three-day weekend in the company’s history, it told NBC News. It received more than 7,000 mortgage applications by close of business on the West Coast on Tuesday alone.

“Because of our size, this is the largest number in sheer volume,” Quicken Loans CEO Jay Farner told NBC News.

Rock Andrews, president of the National Association of Mortgage Brokers and owner of Lending Arizona, said the rush to refinance is similar to demand stemming from the financial crisis in 2008.

“[Rates] are to the point where now anybody who has received a mortgage is eligible to improve their rates,” he said. “It’s out of the ordinary.”

Major banks are scrambling to handle the influx of applications. PNC Bank said it is reallocating current resources and adding to their staff to handle the volume. Wells Fargo is hiring underwriters, processors and closers into their fulfillment group and moving existing employees into their fulfillment operation. Bank of America said it has seen call volume increase, but its online refinancing option has helped to handle the unexpected surge of refinancing applications.

United Wholesale Mortgage, which works with brokers looking for loans for their clients, said they saw their volume increase by more than 50 percent in the last week. The company expected additional business at the beginning of the year but it didn’t expect it would stem from a pandemic.

“We didn't know why this would be this busy but we kind of got this fortuitous bounce in our direction that we were able to handle,” said CEO Mat Ishbia. “Our people are pushed to their max capacity.”

The surge in demand for refinancing mortgages has become so high that some banks are raising their rates to handle the demand because they simply don’t have enough staff to process the requests.

“Literally you can’t even return the calls, much less make outbounds,” said Brian Koss, executive vice president of Mortgage Network, an East Coast mortgage provider. “Right now all people are really concentrating on is stemming the tide on what's coming in. This is a new kind of potential new normal and it’s happened very, very suddenly.”

The record low rates has meant people are saving hundreds of dollars on their monthly mortgage payments. At such a volatile economic moment, some borrowers are grateful for the break.

“Any opportunity to save some money here and there is good,” said Shloka Ananthanarayanan, a condominium owner in New York City who refinanced her mortgage this week.

Ananthanarayanan dropped her rate from 4.25 percent to 3.25 percent, which will save her about $200 a month.

“It’s significant in terms of if I were looking for other jobs and things,” she said. “It helps from a budgeting perspective that my living expenses have decreased a little so that I have more savings if I need to take a pay cut or find something else to do.”