Mortgage Refinances Sharply Up

Brexit is giving hefty bonuses to US homeowners. There is a sharp dip in mortgage interest rates. The consequence is that Americans have a greater amount of money in their pockets. As per Mortgage Bankers Association, the total volume of mortgage applications went up by 14 percent in the week ending July 1 as calculated from previous week, as per  seasonally adjusted measure. At present, the volume of applications is 66 percent more when compared to 2015.

Good state of mortgage

The 30 year fixed rate mortgage is following the lower Treasury yields. According to Freddie Mac, the latter dropped about seven basis points to touch 3.41 percent during the second week of July. The fixed rate averaged about 3.48 percent during the first week of July and it was about 4.04 percent during the identical period in 2015.

For anyone considering mortgage refinance, this is a plum time to do so. People know this, and interest involving refinancing is going up. Mortgage applications went up by 14.2 percent for the applicable week ending July 1. There was a 21 percent increase in refinance index from the first week of July to its peak level calculated since January 2015. According to Mike Fratantoni of Mortgage Bankers Association, there was a continuous drop in interest rates as the markets assessed the Brexit impact. It downgraded the possibility of any additional rate hikes done by the Federal Reserve and also the mortgage rates for 30 years. The loans conformed and dipped to the lowest level in the three year period. The mortgage activity in refinance went up a massive 61.6 percent of total applications- the highest since February 2016. It was an increase from the 58.1 percent in the last week of June.

Newer lows

It must be noted that rates were already low before Brexit. The referendum has pushed them into deeper lows and is now at risk to reach all time lows. This rate drop is broadening the refinance window. Homeowners having fixed rate mortgage with 4.5 percent and more should consider this option and examine the accompanying numbers. Homeowners saddled with 4.5 percent imposed on 30 year mortgages would be greatly benefited from refinancing, provided they enjoy excellent credit.

At present, there is a boom in refinance. The refinance home loan applications spiked by 21 percent in a week, and are at present 113.5 percent steeper as compared to 2015. The time rates were approximately three quarters of percentage point higher. A few of such refinances are the cash-outs as the borrowers duly take advantage of the higher home values.

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