A recent article discussing refinance news analyzed some interesting data regarding the current market behavior in the housing segment. There are a lot of signs of people taking advantage of lower interest rates through refinancing.
According to some recent numbers, the refinancing activity at the end of September 2020 was 50% higher year over year. This market drive is fueled by the FED intervention to lower interest rates. Many people that got a mortgage in the past few years locked in a fixed interest rate that is higher than what the banks are offering today. It makes sense financially to refinance and get a lower interest rate and, consequently a lower monthly payment.
Most refinance news articles speculate that the low-interest rates are not sustainable over the long run. The FED is trying to maintain low-interest rates to prevent the economy from reaching a complete stop and drive consumption.
Regardless of the intention of lawmakers, the lower interest rates benefit the consumers. As the job market seems to be volatile, getting a better deal on an existing loan is a growing trend. The activity in the refinancing sector is expected to grow as more consumers see value in refinancing.
At the end of the spectrum, consumer banks are trying to protect themselves from adverse market conditions and introduce a free of 0.5% on mortgage refinance products. Even with the extra fee added, the current fixed interest rate may still be lower than what most consumers got when they got their first mortgage. Banks call this fee an insurance premium meant to give them the ability to build a fund that can cover adverse market movements. The current rate of defaults and foreclosures do not yet mandate the addition of such a fee. Mortgage news publications adopted a neutral position on these new fees. The trending recommendation is to refinance a mortgage if possible to get a lower interest.
