Recent rate increases in the housing market may be having an effect on those who want to refinance. As the market stabilizes, it seems to become more difficult for individuals to negotiate themselves into favorable mortgages.
Why Are Rates Rising?
Months of lost jobs and foreclosures resulted in tons of individuals having to walk away from their homes. In fact, pre-owned home sales saw the lowest numbers in 12 years just in January of 2009. As a result, the market was flooded with homes that needed to be sold – at any cost. This was good news for those who were looking for some cheap deals, especially since home prices dropped 14.8% in a year’s time. These low prices encouraged many to get back out to buy a house at a great price.
Well, as you know, when enough people get out there to buy homes, rates are likely to rise again. And that’s just what’s happening. In the middle of June we saw refinance rates as high as 5.73% on the 30-year fixed mortgage when rates were only sitting at 4.81% toward the end of May.
How Do Rising Rates Affect Refinancing?
The perk of refinancing is that you can take advantage of a lower rate than you’re currently paying. This is why so many people were opting to refinance when rates dropped. They may have been roped into an adjustable rate mortgage that they couldn’t afford and took lower fixed rates as an opportunity to get out of their bum deal. And even if they had a reasonable 30-year fixed mortgage, lower rates could be very enticing. But as rates creep back up due to a stabilizing economy, those looking to refinance don’t have the great rates available that they once did.
However, it doesn’t mean it’s too late to refinance.
Rates are still fluctuating from week to week. Also, there will still be more foreclosures to report in the coming months. So while the market appears to be stabilizing, there is still a bit of uncertainty out there. By working with your mortgage company to see what options are available, you still may be able to obtain a better rate than what you currently have.
If you’re looking for a good mortgage rate to refinance your current mortgage – check out the easy 1,2,3 step available on refinancing rates.