Low mortgage rates have little impact on refinancing
Extremely low mortgage rates did nothing to bump up the number of mortgage refinancing applications during the last week of summer.
The Mortgage Bankers Association (MBA) reported in its’ Weekly Mortgage Applications Survey for the week ending September 2, 2011 that applications for mortgage loans decreased by 4.9 percent from the previous week. The Refinance Index reported a 6.3 percent decline in home refinance applications.
“Heading into the Labor Day weekend, the 30-year rate was at its second lowest level in the history of our survey – the low point was reached last October – and the 15-year rate marked a new low in our survey,” said Michael Fratantoni, vice president of research and economics for MBA. “Despite these rates however, refinance application volume fell for the third straight week and is more than 35 percent below levels at this time last year.”
According to HSH.com, 30year fixed-rate home loans averaged 4.49 percent last week, while 15-year fixed-rate mortgage rates averaged 3.71 percent.
If you are considering refinancing, these low mortgage rates can make a new home loan more affordable. Many homeowners have been unable to refinance because of dropping home values or credit problems created by unemployment or reduced income.
Low mortgage rates continue
Weak economic news, in particular the Labor Department’s September 2nd report that zero jobs were created in August, is driving speculation about actions the Federal Reserve could take to stimulate the economy. According to The Washington Post, the Federal Reserve may choose to buy long-term Treasury bonds, a move which could drive up demand and lower interest rates on Treasuries. If this occurs, the likely impact would be a longer period of lower interest rates on mortgages.
If you are ready to refinance now, it may not make sense to wait and see what happens in the future, since it is unlikely that mortgage rates could get much lower than they are now.
