Yahoo Finance Ultra-cheap mortgage rates keep refinances flying
Americans are refinancing their mortgages at more than double the rate of a year ago, as homeowners take advantage of mortgage rates that are resting near all-time lows, a new report shows.
But refi requests began to slow last week, even as experts say millions more could still cut their monthly mortgage payments and their total interest costs by refinancing into one of today’s low rates.
Anyone waiting for rates to drop even further could miss out. News that effective COVID vaccines are just around the corner could soon push rates higher, as investors begin picturing an economy returning to normal.
Overall mortgage applications hold steady
Homeowners still have ample opportunities to save.
Mortgage applications dropped 0.6% in the week ending Nov. 27, the Mortgage Bankers Association (MBA) reported Wednesday.
Requests for refinance loans dropped by 5% last week and accounted for 69.5% of total applications, down from 71.1% the previous week. But refi demand was up a strong 102% compared to last year.
“The ongoing refinance wave has been beneficial to homeowners looking to lower their monthly payments during these challenging economic times brought forth by the pandemic," says Joel Kan, the MBA’s forecaster.
But more than 19 million mortgage holders are holding out and could still pocket savings averaging $309 per month by refinancing now, the mortgage technology and data provider Black Knight reported in November.
Good refi candidates — those with a solid credit score and at least 20% home equity — may need to hurry to lock in one of the best rates while they're still available.
Mortgage rates for 30-year fixed-rate loans are unchanged this week at an average 2.92%, according to the MBA’s weekly survey. But a survey from mortgage giant Freddie Mac puts the average even lower, at a record 2.72%.
Low rates prompt rosy housing forecast
Loan applications from homebuyers jumped 9% last week.
Ultra-cheap mortgage rates are enticing more homebuyers into the market, even as available supplies of homes remain low in some parts of the country. Applications for new mortgages — called “purchase loans” — jumped 9% last week.
"The sustained period of low mortgage rates continues to spark borrower demand, and the mortgage industry is poised for its strongest year in originations since 2003,” Kan says.
The MBA doesn’t expect things to slow next year, and is forecasting a record $1.54 trillion in new purchase loans.
The estimate assumes an effective vaccine will help bring the COVID-19 pandemic under control, the MBA says. Just this week, the United Kingdom became the first Western nation to approve drugmaker Pfizer’s vaccine, foreshadowing similar news in the U.S.
If Wall Street celebrates the new vaccines with a huge rally, and money flows into stocks and out of bonds, mortgage rates could climb.
Whether you’re buying a home or refinancing an existing mortgage, compare a minimum of five rate quotes to help find the best mortgage offer you can get. Studies have found you can save thousands of dollars by getting at least five mortgage rate quotes.
Using those same comparison shopping skills, you can save on your homeowners insurance, too. Get quotes from several insurers and review them side by side, to find the lowest price for your coverage.
