The lowest mortgage rates in months have caught the attention of home buyers and homeowners, and borrowing is rising after a long slump.
Refinance is leading the recovery after falling for about a month and a half, a new report shows.
Homeowners are busily trading their mortgages for cheaper credit, but millions more Americans could still do so reduce their monthly payments through refinancing, Experts say.
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Mortgage applications rose 8.6% for the week ended April 16, driven by a surge in refinancing activity, the Mortgage Bankers Association reported on Wednesday.
“Mortgage rates fell on theirs lowest values for around two monthsAfter six weeks of declines, this leads to a slight revival in refinancing activities, “says Joel Kan, chief forecaster at the MBA.
Refi applications were up 10% from the previous week, accounting for 60% of all loan applications, up 59.2% in the previous week, according to the MBA. However, the refinancing demand fell by 23% compared to the previous year.
Home purchase applications continued on their positive path as home buyers wasted no time contracting homes while mortgage rates were falling. Home buyer applications were up 6% from the previous week and 57% from the same period last year.
“MBA assumes that the shopping market will remain strong. The recovering labor market and supportive demographics are fueling demand for residential property in the coming months,” says Kan.
Mortgage rates are falling
In the MBA’s weekly survey, the average interest rate on a 30-year fixed-rate mortgage fell from 3.27% to 3.20%. Prices were the lowest in the week ending February 19.
Other groups that track mortgage rates also show that they have fallen back after rising steadily earlier in the year. Mortgage giant Freddie Mac last week put the average for a 30-year fixed-rate home loan at just 3.04%.
The MBA says it has found that the average rate for a 30 year old FHA loans – supported by the Federal Housing Administration – fell from 3.24% to 3.15% last week.
These loans have simpler down payment and creditworthiness requirements and are popular with first-time buyers.
The average for a 15 year mortgage fell from 2.67% to 2.65%. These short term loans are widely used for refinancing.
Millions more can qualify for a low rate
The recent drop in interest rates means over 13 million homeowners would still benefit from a refi and save an average of $ 283 a month, mortgage technology and data provider Black Knight said this week.
Those best suited to refinance are homeowners with 30-year mortgages who have a credit score of at least 720 and equity of at least 20% on their homes, says Black Knight.
If you don’t know your credit score today, it’s easy too Check your score for free.
Good refi candidates should also be able to save at least three-quarters of a point (0.75) on their interest rate by refinancing. That would work if you still have a loan from 2019 when interest rates above 4% were common.
When you’re hesitant but finally ready to pull the trigger of a refi, collect and Compare rates from at least five lenders to find the best deal near you.
And use your shopping comparison skills to save elsewhere too. When your homeowner insurance is due for renewal, Receive multiple price quotes to see if you can secure a lower rate.