Economy A decline in mortgage rates is likely to encourage...

A decline in mortgage rates is likely to encourage more homeowners to refinance

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Mortgage rates have been falling for the first time in weeks and falling sharply since the week thanks to the Federal Reserve’s steady offensive against the corona virus financial crisis.

The recent hike in mortgage rates has caused refinancing to cool, but a lender trading group expects refi requests to flow again as interest rates drop and offer better savings to homeowners.

Compared to a year ago, “consumers save nearly $ 60 a month – or $ 700 a year in payments – for $ 100,000 each,” said Tendayi Kapfidze, chief economist at LendingTree. “Interest rate savings add up to around $ 20,000 over the 30-year term of a typical mortgage.”

Mortgage rates are moving back to their record lows

Red percent sign on the background of the houses. The concept of price changes in the real estate market.
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Mortgage rates have dropped this week.
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1599686sv / Shutterstock
Mortgage rates have dropped this week.

Mortgage rates are lower this week. In the week ending March 26, the average rate on 30-year mortgages averaged 3.50% in the week ending March 26, mortgage company Freddie Mac reported Thursday. This is a decrease of 3.65% in the last week and lower than a year ago when the average rate was 4.06%.

The odds in Freddie Mac’s survey averaged 0.7 points.

Mortgage rates had risen since the first week of March, when 30-year loans reached an all-time high of 3.29%. This was the lowest in the nearly 50-year history of the weekly Freddie Mac survey. Now the prices look more attractive again.

“The Federal Reserve’s rapid and significant efforts to stabilize the market were urgent and have led to a drop in mortgage rates for the first time in three weeks,” said Sam Khater, chief economist at Freddie Mac. “The combination of the Fed’s measures and the forthcoming economic stimulus will provide substantial support to the mortgage markets.”

The Fed cut a short-term interest rate to near zero and announced that it would buy government bonds and mortgage-backed securities without limiting these purchases.

In the meantime, a bill that makes its way through Congress would boost the economy by granting Americans up to $ 1,200 in cash, significantly increasing unemployment benefits, and providing financial support to businesses and industries.

Refinancing is expected to warm up again

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Lower interest rates are likely to increase the heat in refinancing.
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Andrey_Popov / Shutterstock
Lower interest rates are likely to increase the heat in refinancing.

The Fed’s recent measures “could put mortgage rates under pressure and give more homeowners the opportunity to refinance,” said Joel Kan, vice president of forecasting for the Mortgage Bankers Association.

The trading group reported on Wednesday that mortgage refinancing applications fell 34% due to higher mortgage rates last week. Overall, mortgage applications decreased 29.4% last week.

LendingTree reports that even during the recent recovery in mortgage rates, demand for refinancing credit sizzled and overwhelmed mortgage originators.

LendingTree reports that funding applications in each of America’s 50 largest cities and 45 of the 50 states tripled over the previous year.

According to LendingTree’s Kapfidze, refi opportunities are greatest in cities and states where average credit scores are higher and property prices are rising faster.

Other mortgage rates this week

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Interest rates on other home loans are mixed this week.
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Interest rates on other home loans are mixed this week.

Interest rates for other popular types of mortgage loans are mixed this week.

The average for a 15-year fixed-rate mortgage has dropped to 2.92%, according to Freddie Mac. Last week, the typical interest rate on loans popular for refinancing was 3.06%. A year ago, 15-year fixed home loans averaged 3.57%.

Interest rates on 5/1 variable rate mortgages have risen for a second week in a row. These “ARMs” are set for five years and can then be adjusted up or down each year.

ARMs are currently offered at an initial rate of 3.34%, up from 3.11% last week. A year ago, the starter rates for ARMs at this point averaged 3.75%.

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