As mortgage rates rise, homeowners miscalculate, data shows – The Madison Leader Gazette

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Mortgage business is stalled as borrowing costs continue to climb and fewer homeowners pounce on what experts still see as historically low rates to refinance their home loans.

With rates hitting their highest level in four months, according to a new survey from the country’s latest mortgage trade association, demand for mortgages has stagnated.

And rates are expected to remain on an uptrend as more Americans return to work and new cases of COVID-19 slowly decline. If you have a mortgage, passing on a refi at today’s low rates could cost you thousands of dollars over the life of your loan.

Demand for refinancing falls

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Mortgage applications rose only 0.2% for the week ending Oct. 8 from the previous week, the Mortgage Bankers Association (MBA) reported on Wednesday. A 2% increase in home purchase requests offset a 1% drop in refinancing activity.

Buying activity was good news, but many home buyers still cannot buy as prices rise, inventory continues to be tight and financing costs rise.

Joel Kan, associate vice president of forecasting at the MBA, notes that the average rate on a 30-year fixed mortgage has risen to 3.18% in the business group’s weekly survey, from 3.03% a year ago. a month. Meanwhile, refi requests fell 11%.

“Mortgage rates are at their highest level since June 2021,” Kan says. “We continue to expect weakening refinancing activity as rates rise and borrowers see fewer rate incentives.”

A competing survey found that 30-year mortgage rates fell last week to an average of 2.99%, making the possibility of refinancing more attractive. But this survey, by mortgage giant Freddie Mac, indicates that rates this week have fallen to 3.05% on average.

Signs Point to Higher Mortgage Rates

Large hiring sign now displayed on the front of a business

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Nadia Evangelou, senior economist at the National Association of Realtors, says mortgage rates tend to rise when employment increases and the unemployment rate decreases.

Despite weaker-than-expected hiring in September, the unemployment rate fell sharply last month and the labor market outlook is still positive.

“This translates into higher mortgage rates in the following months,” writes Evangelou in an article on the economic outlook.

Yet rates today are lower than they were before the pandemic, when the 30-year fixed rate averaged around 3.8%.

Real estate agents expect the 30-year fixed mortgage rate to average 3.5% by mid-2022.

“Even though mortgage rates may rise, they will remain historically low,” writes Evangelou. “As more Americans join the workforce, housing demand is expected to remain robust as they turn to homeownership, especially with low mortgage rates.”

How to save on a refi while you still can

Happy young attractive Asian couple man and woman sitting on a sofa using a tablet to find a low mortgage rate.

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Many homeowners still have the opportunity to save money through refinancing. A recent study by Zillow found that nearly half of homeowners who refinanced between April 2020 and April 2021 reduced their monthly house payments by at least $ 300.

But if you want to get the lowest rate possible, you will need a good credit rating. If you haven’t seen yours in a while, it’s easy today to take a free look at your credit score.

If your score needs work, it might be because you have a bunch of high interest debt, like credit card balances. You may want to consider renewing them with a single low interest debt consolidation loan.

If you think you qualify for refinancing, compare the rates of at least five lenders to find the best deal for your area and for someone with your credit profile.

If a refi is not in your future, there are other ways to lower the cost of home ownership. When it’s time to renew your home insurance policy, be sure to get quotes from multiple insurers. The same strategy can also be used to lower your auto insurance bills.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.


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