Home loan refinancing activity is increasing. Learn how homeowners can benefit from low rates and rising home prices. (iStock)
Mortgage refinancing activity spiked in July due to uncertainty in the housing market caused by the delta variant of the coronavirus, according to mortgage data provider Black Knight. The Biden government’s decision to remove the controversial adverse market fee from refinancing for loans backed by Fannie Mae and Freddie Mac also “undoubtedly increased” refinancing volumes during the month, the report said.
“Market uncertainty about rising case numbers for delta variants in the US has helped push 10-year US Treasury yields to their lowest level since February,” said Scott Happ, president of Secondary Marketing Technologies, Black Knight. “This, in turn, has pushed mortgage rates down, with our daily OBMMI interest tracker showing that July ended the month at 30 years at 2.99%, 17 basis points lower than the previous month.”
According to the report, the Lockout Volume, which represents the number of borrowers who set their mortgage rate, rose 5.5% in July. And now the refinancing share of the national market after five months is below 50%.
Read on to learn more about how refinancing your home loan can help you pay off debt in less time and save money to use elsewhere. Of course, it is important to weigh the advantages and disadvantages of a refi depending on your personal financial situation.
When you’ve decided that refinancing your home loan is the right option for you, visit Credible to find personalized interest rates and lenders in one place. Click here to view the latest refinance rates and view home loans based on APR, fees, and monthly payments depending on your loan amount.
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An increase in refinancing
The Black Knight report showed that in a competitive home buying market, mortgage purchases fell 7% in July. This decrease was more than offset, however, by the increase in interest-bearing, fixed-term refinancing and cash-out refinancing, which increased by 24% and 20%, respectively.
“While we haven’t seen homeowners seeking refinancing react so quickly or so strongly to such slight interest rate movements in the past few months, they certainly did in July,” said Happ, adding that they are concerned with interest rates below 3% A very early look at the blackout dates in August suggests more of it in the earliest days of the month. “
With interest rates dropping back below 3%, homeowners could save hundreds on their monthly payments. Applying for mortgage loan refinance is easy. Visit an online marketplace like Credible to get pre-approval for your loan amount in minutes without affecting your credit score.
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Why now is a good time to refinance
It is important to remember that there are a variety of market factors that help create the best possible conditions for homeowners to benefit from a mortgage refi. Some of them include:
- Low interest rates
- Increased withdrawal options
- Reduced refinancing fees
1. Low interest rates: Interest rates affect not only the total amount you pay over the life of your home loan, but also your monthly payments. Interest rates are at all-time lows and if you act quickly to take advantage of them, you can potentially save thousands of dollars in interest.
Even those who bought a home at the start of the coronavirus pandemic could save hundreds every month by refinancing at less than 3% interest. Visit Credible to view an interest table showing multiple lenders at the same time with different interest rate options to help borrowers receive a lower monthly payment.
2. Increased withdrawal options: Homeowners’ equity skyrocketed in the second quarter of 2021. Now the proportion of “equity rich” homes – meaning the amount owed for the home does not exceed 50% of market value – has risen to 34%, according to the latest report by ATTOM Data Solutions.
Last year, only 27.5% of homes were equity rich. This means that many more homeowners have the option of pulling cash out of their home’s equity to use for home renovations or to pay off high-interest debt at a lower rate.
“Rather than harming homeowners, the virus pandemic has helped create conditions that have improved household balance sheets across the country,” said Todd Teta, ATTOM’s chief product officer, in a statement.
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3. Reduced refinancing fees: The Black Knight report found that the elimination of the adverse market refinancing fee helped boost mortgage refinancing levels in July. While the fee should end on August 1, 2021, many loans that started in the previous month would end after that start date in August, so lenders would not charge the fee.
The elimination of the controversial fee will help homeowners save an average of $ 1,400 in refinancing fees added to closing costs or put homeowners on a lower interest rate for those who have chosen to pay the fee during the loan period.
If you want to know how much refinancing your home loan can save you on your monthly mortgage payment, contact Credible to speak to a mortgage expert and answer all your questions.
Do you have a finance-related question but don’t know who to contact? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.