Sharp drop in mortgage rates sparks new refinancing boom

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Sharp drop in mortgage rates sparks new refinancing boom

Sharp drop in mortgage rates sparks new refinancing boom

Many homeowners learn a lot when they see a deal like this.

Demand for refinancing mortgages is skyrocketing, according to a study by a major trade association of lenders. Homeowners are fast approaching mortgage rates, which have dropped to an all-time low amid concerns over the Delta option and the elimination of widely despised loan repayment fees.

But homeowners in the US still leave a lot of money on the table. Zillow recently discovered that only 22% of eligible homeowners have refinanced their homes between April 2020 and April 2021, despite historically low mortgage rates.

If you’ve refrained from refinancing, you’re in luck because the very low mortgage rates are back.

Mortgage Applications Recover Amid Strong Demand for Refinancing

Mortgage application

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The number of applications for mortgages last week increased by 5.7%, according to the Association of Mortgage Bankers. reported on wednesday… This was a significant increase from a week earlier, when the number of applications fell by 4%.

As the number of “buy” loan applications requested by homeowners fell by 2% last week, the overall rise in mortgage demand was driven mainly by refinancing requests. Refinancing activity increased by 9% compared to a week earlier.

“Refinancing applications have skyrocketed as the 30-year fixed rate mortgage has dropped to its lowest level since February 2021,” says Joel Kahn, an MBA forecaster. “With over 95% of applications for refinancing fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan.”

Homeowners have taken the refinancing market by storm as the average rate on 30-year mortgages fell to 2.78% last week, near a record low of 2.65%, according to long-term data. survey from mortgage giant Freddie Mac… According to Freddie Mac, rates have remained low this week, averaging 2.80%.

Refinancing loans accounted for 67.2% of all mortgage activity last week, up from 64.9% in the previous week, according to mortgage bankers.

Why mortgage rates are falling

Mortgage loan rates

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Mortgage rates are dropping as many lenders stop including a 0.5% refinancing fee in their borrowing costs. Now that fees are history, refinancing is even more profitable than before.

Regulators have announced that the pandemic-related “pandemic refinancing fee” which was introduced late last year will officially end on August 1.

The rates also followed the rolling yield or interest rate on 10-year Treasury bonds. The recent uncertainty brought to the economy by the growing number of COVID-19 cases under the Delta option has had a predictably negative impact on investors – and on 10-year bond yields.

With the CDC reporting that less than half of the US population is fully vaccinated against COVID, the cloud hanging over the economy could darken. Throughout the month, the number of new infections in the United States increased, and on July 27, their number exceeded 108,000.

The last time they were this high, on February 9, the average rate on a 30-year mortgage was 2.73%, close to today’s level. As noted throughout the pandemic, bad news about COVID tends to lead to good news for refinancing organizations.

“As rates fall below the key 3% mark, more opportunities open up for homeowners,” said Corey Burr, senior vice president of TTR Sotheby’s International Realty in Washington, DC.

How to get the best mortgage rate available

Happy couple with laptop spending time together at home

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If you own a home and haven’t refinanced it yet, you are probably paying too much. Zillow found that homeowners who took out new loans in the past year saved $ 300 or more per month.

But even though mortgage rates have come down, lenders won’t necessarily feel obligated to offer you the lowest interest rate available. It usually takes a little effort on your part to get a high referee rating.

The mortgage market is extremely competitive, so take your time at the first attractive offer. Check mortgage rates from at least five lenders to compare your options and find the loan that best suits your budget.

But keep in mind: it will be difficult to secure a low interest rate if you have several high-interest debt. Paying to multiple lenders can undermine your home buying plans, so consider low interest debt consolidation loan… You will reduce your interest expenses and pay off your debt faster.

If refinancing your mortgage doesn’t seem like the right decision, there are other ways you can reduce the cost of home ownership. When it comes time to buy or renew homeowners insurance, receiving quotes from several insurers can save you hundreds of dollars.

The same comparison and shopping approach can also help you pay less for car insurance

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