Want to Refinance? Get in Line

Mortgage rates near historic lows have sparked a refinancing boom, and lenders are struggling to handle the surge. “There’s just so much volume,” says Kristin Wilson, a senior loan officer in Bloomington, Minn., for Fairway Independent Mortgage. Clients seeking lower rates now account for about half of her business, up from 20 percent a month ago. “We can’t just ramp up by hiring inexperienced people,” she says, “because they don’t know what they’re doing.”

The lending logjam extends to the nation’s biggest banks, which fired thousands of mortgage workers after interest rates on home loans rose in November through February, chilling refinancing demand. Now, the time needed to close a loan has as much as doubled, to 60 days, according to Wilson and other bankers, and lenders are holding some mortgage rates higher than they could be to slow the torrent of customers. “Mortgage lenders have been slow to lower primary lending rates, which is likely due in part to their lack of capacity,” says Mark Zandi, chief economist at Moody’s Analytics.