29 Sep Hampton Roads Sees VA Loans Refinance Surge
A side effect of COVID-19 has been low interest rates and it is driving millennials and Generation X folks in Hampton Roads area to refinance their Veterans Affairs-backed home loans.
“We’re in this window of historically low interest rates, so it’s offering people who bought not too long ago a surprising chance to save money,” said Chris Birk, who is the director of education for Veterans United Home Loans, the nation’s largest VA loan purchase lender.
In comparison with other metro areas, Hampton Roads is the 3rd in market for total VA loans, the 8th in market for largest increase in VA refinance loans and the 9th in market for biggest increase in VA purchase loans from October till June compared with the year before, Birk said.
In April through June, VA loans in Hampton Roads surged by 122% over the same time last year, with purchase loans increasing 13% and mortgage refinance loans increasing 428%, according to Veterans United’s analysis of Department of Veterans Affairs data.
Of that year-over-year increase, refinances increased a whopping 701% among the region’s millennial borrowers and 438% among the Gen X borrowers, according to the lender. While VA purchase loans were down 7.7% for baby boomers, that demographics’ refinance loans increased 272%.
VA home loans are provided by private lenders and are partially backed, or guaranteed, by Veterans Affairs so veteran and military borrowers can get more favorable terms, like no down payment or no private mortgage insurance.
Missouri-based Veterans United’s website is advertising interest rates as low as 2.25% for a 30-year, fixed-rate purchase loan and 2.625% for a 30-year, streamline refinance loan. As of September 3rd, the average 30-year fixed rate mortgage rate was 2.93%, according to the weekly market survey by Freddy Mac. That’s down from the average rate of 3.65% the week of March 19.
A Majority of the refinance increase in Hampton Roads has comprised of streamline or interest rate reduction loans, Birk said.
“These are the lowest rates homeowners have ever seen,” he said.
However, Hampton Roads borrowers had been refinancing VA loans even before the start of the pandemic, with refinances up 897% among millennials, 445% among Gen Xers, 257% among baby boomers and 220% among the silent and greatest generations, comparing October 2019-June 2020 with the same three quarters the previous year, according to Veterans United.
Basically, from October 2019 to June 2020, total VA loans were up 121% with VA purchase loans up 17% and refinance loans up 450%.
“You just have waves of younger veterans and service members who are in better positions to jump into the housing market in recent years and they continue to,” Birk said.
The housing market in Hampton Roads continues to have strong demand with low inventory, with the region’s multiple listing service, Real Estate Information Network Inc., estimating a supply of 2.19 months in July — the lowest since REIN began tracking the statistic in January 2009. Six months supply is considered a balanced market.