The Coming Wave of Mortgage Refinancing

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Data: Freddie Mac; Chart: Axios Visuals

Mortgage rates are dropping to historic lows, which means homeowners are getting another opportunity to refinance their debt at a lower cost.

Why is it important: For many Americans, mortgage payments represent the largest monthly cash outflow. Refinancing at a lower rate reduces this burden and potentially means more spending capacity, which in turn stimulates the economy.

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By numbers: As of July 22nd, the 30-year fixed rate mortgage averaged 2.78%. Freddie Mac… This is down 2.88% a week ago.

  • This is the lowest level since February 11th.

  • This rate is lower than the effective average rate of all outstanding mortgage debt, according to the data provided Renaissance Macro Research

Yes, but: Mortgage Bankers’ Association chief economist Mike Fratantoni told Axios that while mortgage rates are very low, they were slightly lower at the end of last year. So those who refinanced then have no incentive to refinance now.

But but but: The Federal Housing Finance Agency recently announced the abolition of the 0.5% mortgage refinancing commission introduced during the pandemic.

The essence: “As mortgage rates fall again to near-record lows, coupled with the removal of unfavorable market fees from August 1, we are likely to see another surge in refinancing activity from already high levels,” said Bill McBride, a housing economist. questions Estimated risk– says Axios.

Go deeper: If the Federal Reserve stops buying mortgages

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