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The 30 year average fixed rate mortgage loan remained at 3.42%, down from 3.76% a year ago. The 15-year rate averaged around 2.81%, down from 2.88% last year. These are still fantastic rates for refinances and purchases as we enter into the slow season in the housing markets.
Lenders can still look to offset any declines in purchase volumes by pushing low rate refinances to those who have yet to refi or may have refinanced their home a few years ago.
The challenge comes from new refinancing having the effect of pulling more homes off the market. Some of these homeowners are either taking their equity or reducing their monthly payment providing more disposable income to meet other obligations. As a result, they decide to stay put.
This is good for these owners and the lenders providing the financing. But, let’s face it, it can’t go on forever. Is it good for the housing market? Not necessarily! As a result, we are seeing a decline in homes available for sale, especially at the affordable end. Compounding the problem are builders who are not building many new affordable units. This makes it more difficult for first-time and low to moderate homebuyers to find homes.
Although refinancing is good for some, at present, it is making it more difficult for new entrants into the housing market. In the long run, this can hurt.
It’s unreasonable to think that lenders would turn away refinancing opportunities. But, it’s just as important to continue to educate potential homebuyers, like Millennials, that now is a great time to buy. With rates down, home values improving and the creative low down payment financing options now is a good time to jump into the home buying pool. They just need to find a home.
We need to also educate existing homeowners that now is a great time to sell and move up to a newer, bigger home. They do need to maintain or allow for a slight increase in their current monthly mortgage payment. More house for about the same payment; not a bad deal. Now may be the time to make a move.
Doing so will create new financing opportunities for lenders from these move up buyer, and from the new first time buyers that purchase their homes. It keeps the river flowing.
Sooner or later rates will rise and refinances will dry up (I think). Let’s hope the purchase market can rebound to offset the decline in business. Now might be good to start cultivating your Realtor relationships, if you haven’t kept those relationships current. You may not get the chance when the refis are gone.
