2012 Mortgage Refinancing Forecast Looks Positive
By2012 looks to be another prosperous year for homeowners looking to secure a mortgage refinance at a record low interest rate. As the mortgage refinance rate continues to hover at 4% on thirty year terms, more homeowners are making a move to get their monthly payment reduced. With the Federal Reserve’s commitment and the volume being turned up on the Home Affordable Refinance Program, you can expect next year to another glorious year for mortgage originators and qualified homeowners. The security of an affordable mortgage payment for thirty-years cannot be underscored and that’s why mortgage lenders continue to report a significant increase in refinancing activity.
Refinancing a mortgage makes sense for most borrowers because it reduces their interest rate and increases their cash flow. According to mortgage analyst, James Budge, “Homeowners can do the math and they know that 4% rates will put extra money in their pocket each month.” Budge continued, “You can expect to see a surge in home mortgage refinancing activity if the unemployment rate rises and the American economy continues to sputter in 2012.”
The average borrower who completed a mortgage refinance transaction reduced the interest rate by about 1.2 percentage points, a 22% drop in the mortgage refinance rate. Freddie Mac Vice President and Chief Economist Frank Hothaft, said,”Savvy homeowners are taking advantage of some of the best fixed mortgage refinance rates in more than 60 years to lock in interest savings.”
According to a recent report from Freddie Mac, the majority of homeowners living in the United States that refinanced their home loan either maintained or reduced their mortgage debt in the third quarter. The latest data are another sign that many borrowers are still using their incomes to pay down debts after the economic downturn took a toll on many overleveraged consumers. Low interest rates are also making the net savings from refinancing more attractive.
According to the report, 44% of first mortgage homeowners maintained the same loan amount, while 37% reduced their principal balance by paying-in additional cash at the time the loan funds. This compared with 51% of homeowners who maintained their mortgage balance and 26% who lowered their principal balance in the 2nd quarter.
Loading ...