Homeowners looking to decrease their monthly mortgage payments by refinancing at a lower interest rate may be in luck. However it seems the secret is already out. As CNN Business reports the number of homeowners refinancing their mortgages has boomed as the average mortgage rate reaches multi-year lows.
According to the Mortgage Bankers Association, the average current interest rate on a 30-year fixed-rate mortgage of $484,000 is 3.93%. This marks the first time that figure has dipped below 4% in nearly three years. Moreover, year-to-date, mortgage rates have dropped by 80 basis points. For a 30-year loan of $400,000, that difference amounts to around $200 a month. Meanwhile interest rates are even lower for larger loans as well as 15-year mortgages. Explaining why mortgage rates have been on a downward trend, the MBA’s Associate Vice President of Economic and Industry Forecasting Joel Kan said in a statement, “Fears of an escalating trade war, combined with economic and geopolitical concerns, once again pulled U.S. Treasury rates lower.”
It seems that consumers are well aware of the falling interest rates as the number of mortgage refinancing applications increased by 37% last week compared to the prior week to reach their highest point since July 2016. What’s more, the number of refinancings have climbed 196% year over year. At the same time, although new home purchases have increased, they’ve done so at a much more modest pace. Week to week, new home sales were most recently up 2% while year over year sales have increased 12%. However, according to the National Association of Realtors, sales of existing homes fell 2% in June compared to May — ditto compared to June 2018. As for why sales may be lagging, MUFG Union Bank chief financial economist Chris Rupkey told CNN, “Homes are going to move out of the range of many buyers in terms of affordability, and maybe that is what we are already seeing.”
