Demand for mortgage refinancing rises as rates fall: Here’s how to get yours

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With rates falling again, more homeowners are rushing to refinance their mortgages. (iStock)

Declining mortgage interest rates are increasing the demand for refinancing. The total number of mortgage refinancing applications has risen 20% in the past week, according to the latest weekly mortgage application survey of the Association of Mortgage Bankers (MBA).

Mortgage rates fell for third consecutive week last week up to 2.88% for a 30-year fixed-rate mortgage, according to the latest survey by Freddie Mac. These low rates have relieved some of the tensions in the housing market; as competition intensifies, potential buyers are forced into bidding wars, bidding well above the asking price. But this is most beneficial for homeowners looking to refinance their mortgage.

In today’s low-interest environment, refinancing can save some homeowners hundreds of dollars on their monthly payment and thousands over the life of the loan. Visit Credible to see your personalized rates and find out how much you can save on your monthly payments with a new mortgage.

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What is the reason behind the increase in mortgage refinancing?

Mortgage applications rose overall last week, and it was led by a sudden surge in mortgage refinancing applications, the MBA survey found. The Market Composite Index, a measure of mortgage application volume, rose 16% for the week ending July 9, 2021.

โ€œTotal applications rose last week, driven strongly by increased refinancing as interest rates fell again,โ€ said Joel Kan, MBA associate vice president of economic and industrial forecasting. โ€œGovernment bond yields have fallen over the past month as investors continued to worry about the COVID-19 variant and slowing economic growth.

“Refinancing applications rose more than 20% last week after adjusting for the July 4 holiday, helped by a 23% increase in conventional refinancing applications,” Kan said. “Also, there may have been a delayed run-over from last week when rates also fell, but there wasn’t much response in terms of refinancing applications.”

Check out Credible to see if you can take advantage from transferring your mortgage to a lower interest rate. You can compare several mortgage lenders including rates and fees and see which one suits you best.

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Mortgage rates fall to near historic lows

In the current low interest rate environment, it may be surprising to learn that mortgage rates once hovered around 20%. In 1981, the Federal Reserve fought inflation by raising interest rates, causing the 30-year yield to rise to a record high of 18.63%.

Since then, interest rates have fallen significantly, hovering between 4% and 6% as the economy recovered from the 2008 housing crash. But last year, as interest rates began to plummet, the 30-year mortgage rate plunged below 3% several times. . times. Now the interest rate has fallen to 2.88% for the third consecutive week.

If you want to know your personal interest rate on a new loan, visit Credible to compare rates from multiple lenders at once and get prequalified in minutes without impacting your credit score.

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How much influence does a lower interest rate have on your monthly payments?

With interest rates at an all-time low and homeowners increasingly looking to refinance their home loan, it’s important to know if it would be beneficial for you. In May, 12.2 million homeowners would have benefited financially from their mortgage refinancing last report from Black Knight show.

In terms of monthly payments, with the current median home price of $287,148 and a 30-year fixed-rate mortgage, borrowers would pay $4,475 per month if mortgage interest rates were still at their all-time high since the 1980s. Cutting it down to a 4% interest rate for the same loan term brings the monthly payment to $1,371.

By refinancing a mortgage from a loan with a 4% interest rate to the current 2.88%, homeowners would save $179 per month, reducing their monthly payment to $1,192. Use a . to calculate how much you can save refinance calculator and enter your loan amount along with current interest rates. If you want to get started on getting a lower interest rate through a mortgage, Contact Credible to speak with a mortgage expert and get answers to your questions about closing costs, your current mortgage, or other refinancing options available to you.

Do you have a financial question, but don’t know who to ask it? Email The Credible Money Expert at: moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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