Millions who could refinance are missing out as mortgage rates remain low

Posted by  on Nov 11, 2014

There are, unfortunately, plenty of homeowners who remain excluded from the refinance market. Some may have poor credit, while others don't have enough equity (the amount by which the market value of the property exceeds the loan(s) secured on it) in their homes. But new research, published last week in the September Mortgage Monitor Report from Black Knight Financial Services, suggests 7.4 million people who don't have those issues are yet to refinance, even though they'd seriously benefit financially from doing so. Another 1.7 million could benefit, but by less.

Refinance: time to act

Really? All those millions paying every month more than they need for their home loans -- through choice? It is hard to imagine why that would be. Maybe for some it is simple inertia. Others may not realize that home prices in their area have risen enough to qualify them.

Either way it should be a concern because, while current mortgage refinance rates remain an exceptionally good value, they are drifting up again. Admittedly, it is a slow drift, but it could be enough to spur on those potential refinance borrowers, as well as first-time buyers, who might be wise to wonder whether it is the start of a trend. Last month, the Federal Reserve Board announced that it would end its quantitative easing bond-buying program, which many see as a signal that the economy is improving and that rates will start to rise.

Last week's mortgage rates

During weekending November 7, the average rate for a 30-year, fixed-rate mortgage (FRM) stood at 4.10 percent, up from 4.07 percent seven days earlier, according to HSH.com. Points remained the same at 0.14. So, for the last couple of weeks, rates for this type of loan have been creeping up. But they're doing so from an exceptionally low level. Take out the last three weeks' figures, and you'd have to go back to last June to find this rate so low.

It's a similar story for other types of home loans. The average for 15-year FRMs ended last week at 3.39 percent, up from 3.34 percent a week before. Points fell to 0.10 from 0.11. Again, strip out the last three weeks' figures, and you have to go back 17 months to match the latest rate.

Adjustable-rate mortgages (ARMs) frequently buck short-term trends, and the average for a 1/1 30-year ARM ended the week at 2.59 percent, just one basis point down on its level seven days' earlier, when it stood at 2.60 percent. Points held steady at 0.15.

Our live database of current mortgage rates can help you find the best mortgage rates in your area.

While you're at it…

If all this has persuaded you to undertake a mortgage refinance, then you might as well do the best job possible while you're at it. After all, you don't want to be doing it again any time soon.

Doing the best job means paying the lowest rate you possibly can, while also seeing the whole operation within the context of your wider financial strategy.

But, if all that seems too much hassle and is the reason you have put off refinancing until now, then maybe you should just go ahead in a less thoughtful way. After all, you may miss out a little, but you should still be making savings. And every bit helps.

Start by finding out the mortgage rates available in your area, and then model the possibilities using our mortgage calculators.

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