Global Refinancing Market Size, Share & Industry Trends Analysis Report By Deployment (On-premise and Cloud), By End User (Personal and Commercial), By Type (Fixed-rate Mortgage, Adjustable-rate Mortgage, Cash-out), By Regional Outlook and Forecast, 2022 - 2028
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Get in-depth analysis of the COVID-19 impact on the Refinancing Market
Market Report Description
The Global Refinancing Market size is expected to reach $28 billion by 2028, rising at a market growth of 7.2% CAGR during the forecast period.
Refinancing is the process of changing the conditions of a preexisting credit agreement, typically one that involves a loan or mortgage. When a person or company chooses to refinance a financial obligation, they are essentially looking to adjust the interest rate, the repayment schedule, and/or other contract terms in a way that benefits them. If accepted, a new contract extension that replaces the initial one is given to the borrower.
In general, consumers want to refinance some debt to get better borrowing terms, frequently in response to changing economic situations. Refinancing is sometimes done with the intention of lowering the fixed interest rate, lengthening the loan's term, or switching from an adjustable-rate mortgage to a fixed-rate mortgage or vice versa.
Additionally, borrowers may refinance if their credit rating has increased, if their long-term financial objectives have changed, or if they want to pay off their current loans by combining them into a single low-cost loan. The environment of interest rates is the most frequent reason for refinancing. Due to the cyclical nature of interest rates, many consumers decide to refinance as rates decline.
The economic cycle, market competition, and monetary policy at the federal level can all play a significant role in determining whether interest rates for consumers and companies rise or fall. All credit product types, including both non-revolving loans and revolving credit cards, might experience interest rate changes as a result of these variables. Borrowers with variable-interest-rate goods wind up paying more in interest in a rising-rate environment; the opposite is true in a falling-rate situation.
COVID-19 Impact Analysis
The COVID-19 pandemic had a favorable effect on the refinancing market. Due to the global family income crisis, borrowers began choosing financial products with lower interest rates in order to avoid paying excessive interest rates. Due to slow economic growth, the borrowers were able to minimize their monthly mortgage payments by refinancing at a reduced interest rate. Compared to low-income homeowners, high-income borrowers refinance much more often. Refinancing has consequently increased dramatically during the pandemic. To meet the escalating expectations of end customers, market players concentrated on the creation of new products. Simultaneously, some players increased product flexibility to help clients manage their financial responsibilities throughout the pandemic.
Market Growth Factors
Investment Expansion And Shifting Consumer Preferences For Loan Services
The number of venture capital firms and venture capitalists has significantly increased. These companies concentrate on helping the start-ups they finance to develop their product lines. This trend is benefitting the refinancing market's growth. This action supports the development of technological platforms by financial start-ups for improved client experiences, convenience, accessibility, and an expansion in personnel numbers to handle the rising workload and fuel the demand for product developments.
Access To Shorter Terms And Less Or No PMI
Users will probably need to maintain private mortgage insurance (PMI) when they obtain a traditional home loan and put under 20% of the value to shield the lender from the possibility that they might default on the payments. The monthly mortgage payments may increase by several hundred dollars with PMI. However, if the value of the house has increased and users perhaps also made some loan payments, users may then have at minimum the 20% equity required to avoid PMI. In other words, customers can refinance to a second mortgage, and do away with PMI
Market Restraining Factors
Less Than Expected Home Equity Or Interest Rate Profit In Refinancing
While a refinance may allow customers to save money, it's crucial to know that there are refinancing expenses that could potentially reduce or negate this benefit. Additionally, the savings are frequently long-term savings, so users must determine whether the upfront fees are worth the savings they will have to endure for in the future. This is crucial if they anticipate selling or moving well before the breakeven level. It's crucial to weigh the short-term advantages with the long-term effects when refinancing to a long-term loan repayment or choosing a cash-out refinance.
Based on type, the refinancing market is categorized into fixed-rate mortgage refinancing, adjustable-rate mortgage refinancing, cash-out refinancing, and others. The fixed-rate mortgage segment procured the highest revenue share in the refinancing market in 2021. One of the main drivers of the segment's growth is the fixed-rate mortgage refinance's capacity to provide constant interest rates over the course of the loan. Borrowers who anticipate an increase in interest rates in the near future choose to refinance their fixed-rate mortgages in order to lock in their existing interest rates.
On the basis of deployment, the refinancing market is divided into cloud and on-premise. The on-premise segment witnessed the largest revenue share in the refinancing market in 2021. An important reason propelling the segment's growth is the increase in on-premise loan origination options, including refinancing. To streamline the loan origination process, a well-known mortgage software and on-premise loan have been incorporated.
Based on end-use, the refinancing market is bifurcated into personal and commercial. The commercial segment acquired a significant revenue share in the refinancing market in 2021. Refinancing has many advantages for commercial real estate usage, including better financial metrics like return on investment and net operating income (NOI) which are the main drivers of growth. Cash-outs from commercial refinancing can be utilized to pay for property enhancements including home construction and tax-free improvements.
|Market size value in 2021||USD 17.6 Billion|
|Market size forecast in 2028||USD 28 Billion|
|Historical Period||2018 to 2020|
|Forecast Period||2022 to 2028|
|Revenue Growth Rate||CAGR of 7.2% from 2022 to 2028|
|Number of Pages||192|
|Number of Tables||344|
|Report coverage||Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Competitive Landscape, Companies Strategic Developments, Company Profiling|
|Segments covered||Type, Deployment, End-use, Region|
|Country scope||US, Canada, Mexico, Germany, UK, France, Russia, Spain, Italy, China, Japan, India, South Korea, Singapore, Malaysia, Brazil, Argentina, UAE, Saudi Arabia, South Africa, Nigeria|
On the basis of region, the refinancing market is analyzed across North America, Europe, Asia Pacific, and LAMEA. The North America segment procured the highest revenue share in the refinancing market in 2021. The presence of numerous well-known companies in the area can be credited with the expansion. Additionally, this region is home to a large number of government-sponsored mortgage investors, which provide greater refinancing alternatives. In the coming years, this region will have significant growth potential owing to the existence of mortgage investors.
Free Valuable Insights: Global Refinancing Market size to reach USD 28 Billion by 2028
KBV Cardinal Matrix - Refinancing Market Competition Analysis
The major strategies followed by the market participants are Product Launches. Based on the Analysis presented in the Cardinal matrix; Bank of America Corporation and JPMorgan Chase & Co. are the forerunners in the Refinancing Market. Companies such as Citigroup Inc., Wells Fargo & Company and Ally Financial Inc. are some of the key innovators in Refinancing Market.
The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include Wells Fargo & Company, Ally Financial Inc., Rocket Companies, Inc., Citigroup Inc., Berkshire Hathaway, Inc. (Bank of America Corporation), loanDepot, Inc., JPMorgan Chase & Co. (Wepay, Inc.), RefiJet, Better Holdco, Inc., and Caliber Home Loans, Inc. (Newrez LLC).
Strategies deployed in Refinancing Market
» Partnerships, Collaborations and Agreements:
- Oct-2021: Rocket Mortgage, part of Rocket Companies formed a partnership with Salesforce, an American cloud-based software company. Under this partnership, the company aimed to provide mortgage origination technology to credit unions, banks, and other financial institutions through the financial services cloud of Salesforce. Rocket Mortgage along with Salesforce enabled credit unions and banks to offer personalized and fast customer experiences all through the complete loan process.
- May-2021: Bank of America partnered with Neighborhood Assistance Corporation of America (NACA), a non-profit, homeownership, and community advocacy organization. With this partnership, the companies aimed to offer their homeownership mortgage program, which continued to be instrumental in assisting those who have traditionally been denied affordable homeownership. The partnership helped in decreasing the racial disparity rift and enabled Bank of America to offer more mortgages at a time of opportunity and substantial need in America.
- May-2020: Caliber Home Loans partnered with Infutor, a company specializing in consumer identity management. With this partnership, the company focused on utilizing the ID Max solution by Infutor to offer speed and seamless application to its loan application process. This was done to streamline decision-making based on data and improve service and experience for customers who hoped to refinance or buy homes.
» Product Launches and Product Expansions:
- Nov-2022: Ally Bank introduced Ally Everyday Cash Back Mastercard, Ally Platinum Mastercard, and Ally Unlimited Cash Back Mastercard, three cards accessible by invitation only. Ally Everyday Cash Back Mastercard is a spending card that can be used with rewards, Ally Unlimited Cash Back Mastercard provides a flat 2% rate of cash back on all purchases, and Ally Platinum Mastercard enhances the credit and offers a higher line of credit, so the users will appreciate the automatic credit line reviews of the card.
- Aug-2022: Bank of America unveiled, Community Affordable Loan Solution, a zero-closing cost, zero down payment mortgage solution for first-time homeowners. The product is offered in Charlotte, Los Angeles, Dallas, Detroit, and Miami markets and includes certain Hispanic-Latino and/or /African American/Black neighborhoods. The company availed the product intending to help eligible families and individuals acquire an affordable loan to buy a home.
- May-2022: Citi unveiled Sustainable Minimum Maturity Time Deposits (MMTD) and Sustainable Time Deposit (TD). These deposit solutions provide competitive yields and help consumers in investing excess cash and enhance ESG commitments in their finances through investment services linked to ESG and a sustainable financing range. The solutions are based on the company's social and green bond frameworks, which support the Sustainable Development Goals (SDGs).
- Dec-2021: Caliber Homes Loans unveiled National Condominium Division. The Division specializes in financing solutions and loan products for condos. The company's team of condo specialists helped to offer loan product expertise, secure condo project approvals, ensure efficiencies and stay as a liaison between condo buyers and developers to simplify condo approvals and processes.
- Nov-2020: Citi introduced green deposit solution, a green time deposit product with increased yield. The product offer clients the capability to invest in environmentally friendly initiatives and projects with their short-term liquidity. With this deposit solution, the company increased its offerings of sustainable investment to serve the demands of clients and help them in obtaining their respective sustainability goals.
- Jan-2020: J.P. Morgan launched Development Finance Institution (DFI), to increase the company's financing activities oriented on development in emerging markets. The DFI has been formed with consultations with leading development institutions, which identify business opportunities and activities that can generate financial and development returns on rules-based criteria. The DFI was launched to enhance engagement with investors and clients in financing critical transactions and projects.
» Acquisitions, Joint Ventures & Mergers
- Nov-2022: loanDepot formed a joint venture with National HomeCorp, a homebuilder from Georgia specializing in affordable single-family houses. Through the joint venture, the companies formed NHC Mortgage, which focused on providing more families and individuals homeownership across America while offering customers efficient customer service.
- Dec-2021: Ally Financial acquired Fair Square Financial, a company that provides digital-first credit cards. With this acquisition, the company aimed to enhance its range of consumer products. The acquisition also supported the company's target of being the leading full-service digital bank by incorporating the credit risk improvement and targeting services of Fair Square.
- Jul-2021: Better acquired Trussle, U.K.-based insurance, and digital mortgage broker. Through this acquisition, the company aimed to eliminate huge transactional friction, massive financing costs, and bureaucratic restrictions that came with buying a home and getting a mortgage in the UK with the help of the high street bank Trussle.
- Oct-2020: Lendesk, a Rocket Companies subsidiary took over Finmo, a Canadian mortgage origination platform. Through this acquisition, the company focused on integrating Lendesk's strong broker resources with the digital mortgage experience of Finmo, to provide users with the greatest mortgage experience.
» Geographical Expansion:
- Mar-2022: Ally Home announced the expansion of its geographical footprints by providing its services in Vermont, Virginia, and Massachusetts. Through this expansion, the company focused on offering innovative digital mortgage services to all 50 states in America. With the expansion, the company provided a modern mortgage experience that simplifies refinancing and buying through a digital-only platform, which offers pre-approval in minutes, asks for no lender fees, and provides personalized support from a home loan experts team.
Scope of the Study
Market Segments Covered in the Report:
By End User
- Fixed-rate Mortgage
- Adjustable-rate Mortgage
- North America
- Rest of North America
- Rest of Europe
- Asia Pacific
- South Korea
- Rest of Asia Pacific
- Saudi Arabia
- South Africa
- Rest of LAMEA
Key Market Players
List of Companies Profiled in the Report:
- Wells Fargo & Company
- Ally Financial Inc.
- Rocket Companies, Inc.
- Citigroup Inc.
- Berkshire Hathaway, Inc. (Bank of America Corporation)
- loanDepot, Inc.
- JPMorgan Chase & Co. (Wepay, Inc.)
- Better Holdco, Inc.
- Caliber Home Loans, Inc. (Newrez LLC)
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What would be the size of the Refinancing Market by 2028?
The global Refinancing Market size is expected to reach $28 billion by 2028.
What are the key driving factors and challenges in the Refinancing Market?
Investment Expansion And Shifting Consumer Preferences For Loan Services are driving the market in coming years, however, Less Than Expected Home Equity Or Interest Rate Profit In Refinancing restraints the growth of the market.
What are the major top companies in the competitive landscape?
Wells Fargo & Company, Ally Financial Inc., Rocket Companies, Inc., Citigroup Inc., Berkshire Hathaway, Inc. (Bank of America Corporation), loanDepot, Inc., JPMorgan Chase & Co. (Wepay, Inc.), RefiJet, Better Holdco, Inc., and Caliber Home Loans, Inc. (Newrez LLC).
Which segment is leading the market in 2021?
The Personal segment is leading the Global Refinancing Market by End-use in 2021 thereby, achieving a market value of $19.6 billion by 2028.
Which region dominated the Refinancing Market in 2021?
The North America market dominated the Global Refinancing Market by Region in 2021, and would continue to be a dominant market till 2028; thereby, achieving a market value of $9.6 billion by 2028.