Categorized | Finance and Mortgage

Boom in Refinancing Applications Has Banks Overwhelmed

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Over the past few weeks, banks have been inundated with mortgage refinancing applications due to record-low rates. The increase in workload has left many banks in a difficult position, as the struggling financial market caused many of them to cut jobs.

With a depleted workforce and a drastic increase in the volume of work, many banks are simply unable to handle the vast amount of refinancing applications in an adequate timeframe. In fact, it is now taking many banks as much as two months to close a loan, which is twice the amount of time that it took prior to the refinancing boom.

Fixed-rate mortgage loans have dropped a full percentage point since February, prompting many consumers to submit refinancing applications. For some banks, refinancing applications now account for fifty percent of the overall workload. Due to the overall downsizing of the industry, as well as new regulations that prevent such practices as the hiring of temporary employees, banks have no choice but to provide a slower turnaround time in the closing of refinanced loans.

The overwhelming workload has actually caused some banks to offer less than stellar rates, as they attempt to limit the volume of work to what their staff can adequately handle. Such practices have actually created an environment where the difference between mortgage loan rates among banks has significantly widened, creating an interesting shopping experience for consumers. Consumers may have at one time gotten the same, or very similar rates regardless of the bank that they chose to use for their mortgage loan. However, they now will be faced with huge disparities in the loan rates offered by different companies, and must sufficiently shop around to make sure that they are getting the best rates possible.

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About Ella Jourgeson

Ella was recently an intern who checked all the articles for grammatical and spelling errors. She is now an all purpose writer filling in wherever we need help.

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