Mortgage Refinancing Boom Is Too Automated
Computer-driven appraisals are an innovation that nobody needs right now.
Homeowners are rushing to refinance mortgages.
Photographer: H. Armstrong Roberts/Hulton ArchiveThe Covid-19 pandemic has unleashed numerous unexpected economic consequences. One that has turned out to be good for the economy but could end up being disastrous is the boom in mortgage refinancings. Just like with the last financial crisis, there are signs that the surge in U.S. consumers seeking to take advantage of ever lower borrowing costs are being aided by relaxed lending standards.
The Mortgage Bankers Association's refinancing index soared in March to its highest level since 2012, and remains more than 40% above its level this time a year ago despite about 13 million Americans being out of work and relying on weekly unemployment jobless benefits from the government. Refinancings have allowed homeowners to take advantage of record-low interest rates to either cut their monthly expenses or cash out some of the equity in their homes to see them through these tough times.