Last week mortgage rates rose to over 4% for the first time since March 2012! The average rate for a 30 year fixed rate mortgage is 4.46%. This rise in interest rates will most likely send more buyers out into the market to get a home before rates climb even higher making the homes for sale shortage even greater. On the other hand for some buyers, they may need to adjust the price of homes they are looking at since they are becoming more expensive with higher interest rates.
The number of refinancing applications was down another 5% last week – a plunge of 40% since just back in May! For many homeowners, a refinance just is no longer worth it if rates are 4% or more.
With the low interest rates many homeowners are still thinking about refinancing to lower their monthly mortgage payments. While this seems like a great idea, there are some things to consider before you embark on this path. Refinancing is not cheap – have you looked into what it will cost you? How long will you be staying in your current home? If you are moving soon, you most likely won’t recoup the cost of the refinancing. Does your current mortgage have a pre-payment fee? To get the exact costs of refinancing please check with your mortgage banker but I have a short list of some of the costs that you will need to consider.
Refinancing is a wonderful idea with the low interest rates but you do need to find out the costs and see if it is worth your while or not.
For the week ending March 29, mortgage applications for home purchases were up almost 7%, but this was most likely driven by the increased cost of an FHA mortgage starting April 1. Overall mortgage applications for home purchases are up about 4% over last year, while refinancing applications are starting to decline. With the increases in home sales the 4% increase in mortgage applications is to be expected. Refinancing applications are also expected to decline as interest rates slowly start to inch upwards.