The Mortgage Bankers Association's (MBA) chief economist is hopeful that last week's run-up in the LIBOR index could be the spark needed to light a fire under the refinancing sector.
Moreover, early Monday morning, the yield on the benchmark 10-year Treasury was poised to fall yet again — perhaps to a new 52-week low. If it does, consumers could see declining rates all around.
For the most part, borrowers with Libor-based adjustable rate mortgages have been reluctant to trade in their loans for safer fixed-rate products because the interest rate on their ARMs is less than that currently available for fixed loans, even at the fully indexed rate.
But now that the Libor benchmark is moving up, they could change their minds, Jay Brinkman told ASR sister publication National Mortgage News on the eve of the MBA's annual National Secondary Market Conference in New York.
It's too early to tell whether the hoped-for increase in refis will be a "boomlet" or a "wavelet," Brinkman said. But he reported that several MBA members told him their phones were "ringing off the hooks" Thursday and Friday of last week from callers who were worried that their next rate adjustments could drive their payments higher than if they were to refinance. The economist said he is watching the situation carefully.