According to recent surveys from the Mortgage Bankers Association, refinance applications are down 55% from recent highs. The latest survey shows the smallest amount of refinance activity in years, yet refinances still account for 63 percent of all mortgage applications.
Clearly the uptick in interest rates from the lows we say back in May 2013 are having an effect on activity. As mortgage rates move higher, refinancing makes less sense for more and more people. Current best execution on 30-year fixed mortgage rates is running +/- 4.50%, which is about 1% higher than the recent lows.
There is also a huge mental aspect to refinancing. When people “hear” rates have gone up, many don’t even both to check with their local mortgage professional to run numbers. But interest rates are only one aspect of refinancing. Getting a short term, like a 15-year mortgage, can easily save many people well in excess of $100,000 or more. That is nothing to ignore. For others, refinancing back to a new 30-year fixed mortgage could save them hundreds of dollars a month.
Finally, many people still are under the belief that that can not refinance because of underwriting rules, or because their home has lost value. But programs like HARP 2, the Home Affordable refinance Program for underwater home are working well for millions of people.
My advice is to never assume. Call your local licensed mortgage professional for a quick review. You may be surprised at what you hear!