WASHINGTON–The average 30-year fixed mortgage rate dropped to a 10-month low of 6.56% last week, according to Freddie Mac, and that has led to expanded homeowner interest in refinancing their current mortgages, according to a number of analyses.
The decline in rates means more than two-million homeowners could now save money by refinancing, according to ICE Mortgage Technology. That’s up from 1.7 million at the end of July.
If rates keep falling to 6%, nearly six million people would reduce their rate by at least 0.75 percentage point in a refinancing, a common threshold at which homeowners would save enough to justify the associated costs, the company’s analysis found.
The 30-year mortgage rate peaked at almost 8% in the fall of 2023, and high rates have created a market in which many longtime homeowners have been hesitant to sell and give up their low rates, including on loans taken at the lows during the pandemic.
“It is still a small share of homeowners who could benefit right now from trading in old loans for new ones,” the Wall Street Journal noted in its review. “But there have been signs of a broader thaw in the mortgage market as rates have fallen. Homeowners took out more mortgages last quarter than at any point since 2022, according to ICE.”
Cash-Out Refinances Grow
Large lenders Rocket Cos. and JPMorgan Chase reported higher mortgage volume in the second quarter than the first.
In addition, as the CU Daily has reported, a Mortgage Bankers Association index tracking refinance applications was up 19% from a year earlier, according to the trade group’s data for the week ended Aug. 22.
The ICE data also reveal that cash-out refinances accounted for 59% of all refinances last quarter, helping drive the overall demand for mortgages.
