The Trade War with China caused mortgage rates to plummet this week. Though it remains to be seen how the economy as a whole will be affected in the long term, it’s great news right now for home buyers looking to lock in a low interest rate. Those benefitting most, however, are people looking to refinance their current mortgage loans.
Increase in Mortgage Refinance Applications
We have already seen a lot more home refinance applications as a result of this rate drop and we expect even more. It makes sense. The Mortgage Bankers Association (MBA) has already noted a significant spike in mortgage refinance applications in recent weeks. To put this in perspective, what is called the Refinance Index was up 12 percent from the week ending July 26 to the week ending August 2. This index was 116 percent higher than the same week in 2018!
Graph courtesy of Mortgage News Daily.
More Refinances than New Purchase Loans
The numbers definitely favor refinances over new home loans, as well, with 53.9 percent of total applications being for loan refinancing. That is a very high ratio because normally there are much more new home loan applications than refinances.
“The Federal Reserve cut rates as expected last week, but the bigger influence on the financial markets was the beginning of a trade ware with China,” says Mike Fratantoni, MBA Senior VP and Chief Economist. “The 30-year fixed rate mortgage fell to its lowest level since November 2016, and the drop resulted in an almost 12 percent increase in refinance application volume. We fully expect that refinance volume will jump even higher this week given the further drop in rates.”
Why It’s Time to Act
Mortgage loans of all types saw a sharp rate decrease. The reason it is so appealing for refinancing is because that process is a lot quicker than buying a home. There are many less steps to take. Getting approved with a low rate locked in is fairly simple if you qualify for a refinance.
Whether you want to shorten the length of the loan, reduce monthly payments or pay off more principal than interest with each payment, there are plenty of good reasons why refinancing right now might make perfect sense. You may even consider a cash-out refinance if you want to pull some of your equity to pay off other high-interest debts or make home improvements.
If you are looking to refinance your home loan, now is the time to do it. We don’t know how long these super-low rates will last, so it’s a good idea to take advantage while you can. To get started on your refinance application and to see if you qualify for a rate reduction, contact Transparent Mortgage today. You can call us at (619) 701-3906 or you can email me personally at firstname.lastname@example.org. We’ll be glad to help you explore your refinancing options and get you set up with the best possible mortgage loan.