Housing
The Cities Where People Are Most Likely to Refinance Mortgages
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Home sales have surged in the past year. Among the reasons are people who have left big cities due to the pandemic, the steady incomes of middle and upper-class Americans, and historically low mortgage rates. Mortgage defaults have plunged over the same period. Banks have learned the lessons of the housing crisis that accompanied the Great Recession. Mortgages given to people who were not creditworthy triggered an avalanche of defaults. Banks owned hundreds of thousands of homes that had dropped in value due to foreclosures.
The rates at which people pursue mortgage refinancings differ widely from city to city. Yet, the reasons people do not receive this type of home loan are common.
Lending Tree recently looked at the mortgage landscape and found four common reasons people are denied refinancings. They are “debt-to-income (DTI) ratio, credit history, incomplete credit application and collateral.”
DTI was the cause of 26.5% of rejections. Credit history was the reason for 23.0% of the applications that were turned down, while incomplete applications prompted 18.5% of rejections and 14% were due to insufficient collateral applications. The data came from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act 2019 data set and covered 2.8 million mortgages. That means the information is relatively old, but it might be directionally correct.
This is where people are most likely to refinance a mortgage:
Salt Lake City
> Mortgage refinance approval rate: 89.21%
> Leading cause of refinance denial: DTI
> Share of refinances denied for leading cause of denial: 27.5%
Portland, Oregon
> Mortgage refinance approval rate: 88.48%
> Leading cause of refinance denial: DTI
> Share of refinances denied for leading cause of denial: 27.8%
St. Louis
> Mortgage refinance approval rate: 88.41%
> Leading cause of refinance denial: Credit history
> Share of refinances denied for leading cause of denial: 26.4%
Click here to see the cities where housing prices are rising fastest.
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