Flyhomes took one look at the nation’s rising interest rates and wary sellers and decided that a good deal on refinancing is the solution. Buy Now, Refi Later is Flyhomes new refinancing program aimed at tempting more buyers into the housing market.
Dan Richards, head of mortgage at Flyhomes sat down with RealTrends to discuss the program and his overall view on the housing market today.
RealTrends: Can you give me an overview of the Buy Now, Refi Later program? What are it’s goals?
Dan Richards: The purpose of our program is to get homebuyers off the sidelines. If they can swallow the higher rate now, then they can know that there will be some rate relief at some point in the future. We are trying to remind people that they can refinance, just in general. When people refinance, the most common way to do that is by baking in the third-party costs into the loan and financing those too. In that case, it looks like it is at no cost to the homeowner, but they are paying for those fees at some point. The program at Flyhomes, we don’t do that.
RT: Flyhomes recently released a study “Interest rates inertia” on consumer behavior in the housing market, do you think that open access to refinancing could change any of the statistics or trends seen in that study?
DR: For buyers who are just beginning to look for their home, the prospect of refinancing that rate makes them more active. Overall, the psyche of the homebuyer is that last year’s spiking rates were shocking, but now, things are settling down and homebuyers are moving.
This time of year the purchase cycle does generally start to surge, but the possibilities of refinancing down the line are affecting those numbers now. The difference between 5.5% and 5.25% may not seem like much, it adds up to about $20 per month. But, over the life of the loan, that money is a significant difference to the borrower and the lender. So, the more customer friendly we can get in this industry, the better.
RT: Do you have any predictions for the 2023 housing market?
DR: I suspect we’ll see those mortgage rates bounce up and down throughout the year. Whether we hover in the low 6% or decrease into the mid 5% range, no one really knows. The psyche of the homebuyer, whether they are a first-time buyer or not, is thinking, “is now the right time even though rates are high?” There is significant demand at the top of the funnel; people are expressing interest in buying a home at some point.
We are also seeing a significant number of people who have slowed or stopped their search because of interest rates. In my opinion, if you can afford to buy and qualify for the mortgage, and you are only dealing with the sticker shock of the mortgage payment, then I would recommend people buy now anyway. As soon as rates drop meaningfully, home prices are going to rise again because inventory is still at historic lows. That is the purpose behind the Buy Now, Refi Later program, to get prospective buyers off the sidelines.
This market is cyclical. When mortgage rates drop again, we can give homebuyers the peace of mind that they can come back to Flyomes and refi that mortgage they got at today’s rates.