Refinance habits improving consumers' finances overall?
Poli Mortgage Group, Inc.
Over the past several months, the share of the mortgage market taken up by refinances has slipped considerably, and that's due to the fact that steadily rising rates might have turned off many borrowers. However, many experts note that it's more the perception that rates are high that's keeping current owners away, as the savings available in the market today are still considerable compared with pre-recession norms.
And those rates are actually doing a good job of saving consumers money overall, according to the latest refinance data from the government-sponsored mortgage-backing giant Freddie Mac. In all, the average refinancers in the first quarter of the year cut their mortgage rates by about 1.4 percentage points, and as such they will likely save $2,800 in interest payments alone on a $200,000 home loan, over just the next 12 months.
Frank Nothaft, Freddie Mac's vice president and chief economist, noted that more than 1 in 6 consumers who refinanced chose to pull equity out of their homes, up from 14 percent a year earlier, but down significantly from the all-time high of 89 percent seen in the third quarter of 2006, the report said. Altogether, those people cashed out some $6.5 billion in home equity, down from about $8.5 billion a year earlier, and well below the all-time high of $84 billion seen in the second quarter of 2006.
More statistics show improvement
In addition, 83 percent of consumers who refinanced kept the value of their loans the same, or reduced them with more money at the closing table, though that's down from the all-time high of 88 percent during the second quarter of 2012, the report said. Meanwhile, 39 percent cut their loan terms, marking the highest level since 1992, and up very slightly from the final quarter of last year.
With rates set to rise, though, there will likely to be a continued devaluing of the refinance process through declining affordability. Consumers may be able to research rates on the Poli Mortgage Group's website, 24 hours a day and seven days a week, without having to provide any personal information at all. When it comes time for them to buy, they will also be able to speak directly with a Loan Officer - all they'll have to do is simply fill out a Contact Us form on the website or call 866-353-7654, and a representative will contact them shortly.