Millennials drive huge VA home loan refinance boost in Hampton Roads

By TARA BOZICK | The Virginian-Pilot | Published: September 14, 2020

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NORFOLK, Va. (Tribune News Service) — Low interest rates caused by the COVID-19 economy are driving millennials and Generation Xers in Hampton Roads 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, director of education for Veterans United Home Loans, the nation’s largest VA loan purchase lender.

Comparing the region with other metro areas, Hampton Roads is the No. 3 market for total VA loans, the No. 8 market for largest increase in VA refinance loans and the No. 9 market for biggest increase in VA purchase loans from October through June compared with the year before, Birk said.

In April through June, VA loans in Hampton Roads increased 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 demographic’s 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 Sept. 3, the average 30-year fixed rate mortgage rate was 2.93%, according to Freddie Mac’s weekly market survey. That’s down from the average rate of 3.65% the week of March 19.

Most of the refinance increase in Hampton Roads has been streamline or interest rate reduction loans, Birk said.

“These are the lowest rates homeowners have ever seen,” he said.

But 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.

Overall 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.


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