After spiking at the end of last year, mortgage rates have spent most of this year falling. Now they’re a motivating factor not only for potential homebuyers, but existing homeowners as well. In fact, Fannie Mae’s latest outlook sees a refinance boom ahead.
“Mortgage rates are approaching their lowest level in recent decades, and as they have moved lower, more and more homeowners are finding incentive to refinance,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said. “We estimate that 35 percent of outstanding mortgages are now ‘in the money,’ meaning borrowers may realize significant cost savings by refinancing; as such, we expect the share of refinance originations to grow through the remainder of the year.”
However, though favorable rates are helping to increase refinance activity, the purchase mortgage market may not see the same boost. That’s because buyers have to find a home in addition to a mortgage, and some housing markets are lacking in inventory.