Why suburban home buyers are getting a break right now
Alex Prybell and his wife, Nicola Prybell, are millennials without kids who decided to do a traditional rite of passage - get a mortgage and buy a house.
The Buffalo Grove couple said their apartment lease was up in September. So they parlayed their raises at work into a down payment, locked in a 3.75 percent mortgage rate, and bought their first home in Grayslake.
They move in Aug. 1.
"We're very excited," said Alex Prybell, 25. "It took a lot of planning, but now we're ready to decorate and work on the house."
The Prybells are joining a growing wave of homebuyers, and those seeking to refinance, after mortgage rates started dropping to near historic lows. After the Fourth of July holiday, and after the Brexit vote when Britain opted out of the European Union, mortgage and refinancing applications jumped to their highest levels in about four years, experts said.
Competitive home pricing, more first-time homebuyer programs, an improving economy, and even a nudge from Brexit all helped to reinvigorate the real estate market here and nationwide, experts said.
"Brexit has really caused a flight of money into more stable investments, like real estate," said Bob Perry, executive director of Palos Heights-based Greater Midwest Lenders Association, which has about 1,600 members.
High demand for those investments pulls down interest rates.
Yet, while the current rates are hovering around 3.5 percent for 30-year fixed mortgages, they aren't yet historically low and were at about the same level in 2012, according to data from Washington, D.C.-based Mortgage Bankers Association.
In addition, refinance applications recently soared 61.6 percent and mortgage applications nationwide jumped 14.2 percent compared to the previous week in early July.
Compare the latest figures to historical data, where one of the biggest one-week jumps in 30-year fixed mortgage applications came Oct. 2, 2015, at a 27 percent increase. The largest jump for refinancing came just after the recession on Feb. 13, 2009, at 64.3 percent.
Mike Axelrood, mortgage regional manager for PNC Bank, said mortgage applications soared 41 percent at his bank.
"It was a dramatic increase," Axelrood said.
Axelrood has been finding that more people have become eligible to refinance because their homes are no longer under underwater, or mortgaged for more than it's worth.
"A lot of homeowners are finding that their home prices are increasing, so they want to lock in those rates," he said.
Kevin Christopher, managing director of mortgage banking at Chase, said the local market reflects what the nation has been experiencing in recent weeks.
"We have been consistently busy and we're also dealing with a regulatory environment that's different from what it was previously," said Christopher. "So we continue working with customers and how the role the mortgage plays in their overall financial plan."
Kirk Steinbruecker and his wife Amy Jo wanted to move up from a townhouse in Bloomingdale to a new single-family home in Addison. So they locked in a 4.125 percent rate in April.
"We were looking to move to a bigger home and the timing just seemed right," said Steinbruecker, 51. "We were in a situation that allowed us to put a full 20 percent down and the rates were pretty good."
But who knew in April that the mortgage rates would continue to drop so favorably by July?
"We wanted to get it before the home was sold," said Steinbruecker. "There were a few times that these homes would go before we could put a bid on them."
Yet despite the gains seen by loan officers, the overall real estate market still needs to catch up more to get back to where it was before the recession, added Perry.
"Year over year, we have been seeing improvement in the number of loan applications, but we still have a long way to go," Perry said. "We're still seeing millennials who are living in their parents' homes now instead of going out in the market and buying a home or others who are still in apartments instead of owning their own home. Traditionally, they would have become homeowners by now, but they still remain hesitant."