Mortgage Interest Rates Drop To Benefit Homeowners In Refinancing
This BLOG On Mortgage Interest Rates Drop To Benefit Homeowners In Refinancing Was PUBLISHED On June 7th, 2019
With the recent Mortgage Interest Rates Drop, many homeowners who have closed on their home loans last year will greatly benefit.
- Both potential homebuyers and homeowners are taking the news of the Mortgage Interest Rates Drop as positive news
- To join this great news are lenders
- Lenders are expecting to have record refinance transactions this year with Mortgage Interest Rates Drop
- The FED is expected to lower interest rates due to fears of inflation, lower than expected job numbers on June 7th, 2019, and President Trump implementing tariffs on goods
- The Federal Reserve Board, led by FED Chairman Jerome Powell, has announced that the FED will likely cut interest rates
- With lower interest rates, it means lower mortgage rates
In this blog, we will discuss Mortgage Interest Rates Drop and what this means for home buyers and homeowners.
Mortgage Rates Today Versus Last Year
Mortgage Rates have been falling since the start of 2019.
- There were four interest rate hikes in 2018
- Homeowners who closed on their home loans in 2018 got high mortgage rates
- Many homeowners who closed their mortgages in 2018 locked their rates at 5.0% or higher
- Luckily, home demand never slowed with the high mortgage rates last year
- The Federal Housing Finance Agency (FHFA) had to increase conforming loan limits for three years in a row due to escalating home prices
- HUD, the parent of FHA, followed FHFA’s lead and increased FHA Loan Limits for three years in a row
- The FHFA Conventional Loan Limit for 2019 is capped at $484,350
- FHA Loan Limits for 2019 is now at $314,827
The mortgage interest rates drop will benefit millions of homeowners who closed their home loan in 2019.
Reason For Mortgage Interest Rates Drop
Federal Reserve Board Chairman Jerome Powell announced that the FED will be lowering interest rates in 2019. Alex Carlucci, a Senior Vice President at Gustan Cho Associates issued the following statement:
The average rate on the popular 30-year fixed has fallen from a recent high of 4.23% on May 21 to 3.94% now. Fear over the ongoing trade war with China, and now potentially Mexico, has investors rushing to the relative safety of the bond market, pushing yields lower. Mortgage rates loosely follow the yield of the 10 year Treasuries. There are now about 5.9 million borrowers who could see their rates drop by at least 75 basis points by refinancing their mortgages. That is an increase of 2 million in just the past month. Mortgage interest rates drop will continue and stock prices of home builders will continue to rise into 2020.
Homeowners With 5% Or Higher Rates Will Benefit By Refinancing
Any homeowners with mortgage rates higher than 5% will benefit from refinancing today.
- VA and FHA Streamline Refinances allow homeowners with FHA and/or VA Loans to do a no income doc, no home appraisal streamline refinance with all closing costs paid by the lender
- FHA and VA Streamlines are a fast track refinance program where most borrowers can close their streamlines in 2 weeks or less
- Gustan Cho Associates at Loan Cabin Inc. are direct lenders with no overlays on government and conventional loans and are experts in FHA and VA Streamline Mortgages
Massimo Ressa, the Chief Executive Officer of Gustan Cho Associates, issued the following statements about homeowners saving money by taking advantage of mortgage interest drop:
We currently have the largest population of eligible candidates in nearly three years that will benefit from this mortgage interest rates drop. This can be translated into $1.6 billion in potential monthly savings. Per mortgage borrower, the savings is about $271 per month. If the rate were to drop just another quarter point, close to 7 million borrowers could benefit from a refinance, with a collective savings of just over $1.8 billion. Falling rates are also benefiting home buyers. This holds especially true as home prices are now cooling. Home prices in March were up 3.8% annually. This was the first time growth has fallen below its 25-year average of 3.9% since 2012. Affordability of homes is now the best it’s been in more than a year, with the monthly payment on the average-priced house down 6% in the past six months (that’s with a 20% down payment). When we factor income into the equation, we see that it takes 22% of the median income to purchase the average-priced home. That’s the lowest payment-to-income ratio in more than a year as well, and far below the long-term average of 25.1%. Homebuyers have been up against a tight supply of lower-priced homes and an overheated market in general. While the price gains have come down significantly, today’s younger buyers are still saddled with high levels of debt and are often paying very high rents, making it increasingly difficult to afford a home.
For more information about this blog and/or other mortgage related questions, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org.