Mortgage refinancing saves homeowners $3.4B in Q2
Homeowners will save about $3.4 billion in the next year as a result of refinancing their mortgages, according to Freddie Mac.
In its quarterly refinance report, the McLean, Va.-based mortgage buyer said that at least half of borrowers who refinanced their loan in the second quarter lowered their annual mortgage interest rate by at least 20 percent. The new interest rate was about 1.25 percentage points below the old rate.
“A big part of the benefit of refinancing is the lower monthly payment that borrowers enjoy – the payment savings from ‘rate-and-term’ refinancing done during the quarter is about $160 a month on a $200,000 loan,” noted Frank Nothaft, Freddie Mac vice president and chief economist, in a news release.
While fixed rates are still low, they are starting to creep up.
In fact, mortgage rates in the U.S. rose for a second consecutive week. The average 30-year rate increased to 5.25 percent from 5.2 percent, Freddie Mac reported Thursday. The 15-year rate was 4.69 percent.
“We are anticipating more than one-half of originations to be for refinancing throughout the rest of the year, as long as rates stay near their current levels of 5.25 percent,” Nothaft said.
Freddie Mac also reported that 62 percent of those who refinanced a second mortgage either kept the same principal balance or reduced it. That was up from 57 percent in the first quarter.
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