If you have a mortgage rate above 4%, you should keep an eye on mortgage rates during August to see if there is an opportunity to refinance and save money. (Potential buyers should obviously also take notice, but they were probably paying attention already.) In November 2018, the average 30-year mortgage rate was nearly 5%. In July, the average 30-year mortgage rate was only 3.75%. There are a LOT of outstanding mortgages that become good opportunities for a refinance with even small drops from here. See this chart via @lenkeifer:
Today, the 10-year Treasury bond yield went down to 1.74%, the lowest value since November 2016. According to CNBC, the rate drop at this longer maturity was a result of both the recent Fed rate cut and trade war concerns.
Why is this important? The 10-year rate and 30-year fixed mortgage rates tend to move together. The average 30-year mortgage in mid-2016 was closer to 3.5% (chart source).
Even before this most recent rate drop, mortgage originations had already spiked, per the WSJ). A swing from 5% back down to 3.5% will create even more.
Bottom line. If you got a 30-year mortgage between late 2016 and mid-2019, there is a good chance that you may be able to lower your mortgage rate via a refinance. Get an accurate full quote with all the costs involved with a online comparison site like LendingTree (tip: don’t enter a phone number if you don’t want them to call you) or go local and call up your neighborhood broker. You might also try an “instant quote” below that doesn’t require any personal information. If you can save money, lock in the rate as they can pop back up quickly.
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Hi Jonathan right now I have been looking into refinancing my 4.25% mortgage. I got quotes for 3.75%, 3.625. Should I go ahead and pull the trigger or do you think I should wait till the end of the month hoping for a lower rate?
I would be sure to consider the total refi costs vs. the future savings. Get a full quotes with all the closing costs in different scenarios. There is always a balance between upfront fees and the rate. Some people like a near “no cost” refinance where you don’t get quite the lowest rate but the closing costs are mostly offset so that you’re pretty much getting a lower rate for “nothing”. Others don’t mind paying some closing costs if they can get a lower monthly payment and break even in X months.
My opinion is that if you at those historical charts above, 3.5% is pretty much as low as you can reasonably expect for a 30-year. That’s really low! If you can get 3.625% without paying a ton of points or even 3.75% with little cost, I might lock that in if it gave me guaranteed savings.
Re REFINANCING
Here’s what is not being disclosed:
ADD ON FEES from $4k-$7k
ie $94k, $101k to be finance.
Yes, there are always fees to be paid, that’s why you can’t just refi when the new rate is a tiny bit lower. You have to get a full quote and see the upfront costs vs. potential future savings. If you agree to pay points, you can get an ever lower rate. If you want them to pay your closing costs (negative points), you can get a higher rate (but it might still be lower than what you have now). Don’t let them roll the costs into a bigger mortgage.
I would wait until recession hits. Fed then will lower the interest rates aggressively.
Might have issues getting the same valuation for your house then
Belgium now has negative mortgage rates so you get paid to borrow. I know we might never come to that level but it is nice to consider the possibilities 🙂
Love this blog and have been following it since the beginning. Jonathan, if you are sponsored by lending tree, you should say so. You cannot go on their site and “run a quick online quote”. That would imply I put some simple information and get a simple quote based on national averages. Instead, you put information and IMMEDIATELY (I mean in less than a second) receive at least 5 robocall generated phone calls + dozens of emails and texts. Its been over an hour and I’m still receiving calls. Again, I have not problem in how lending tree does their business. Seems to be very helpful to the consumer actively looking to refinance but it definitely is not a site to get a simple and quick quote. Bankrate.com on the other hand would be a quick quote where you don’t provide personal information and receive national averages. Thanks!
I do receive a commission if you run a quote through LendingTree, but they did not sponsor this post. I just picked them out of many options as a reputable major wholesaler that will result in “real” quotes with closing costs, origination fees, points, and all that. I’m sorry to hear about the robocalls, I did not know that. I will look for alternatives, and note to not provide them a phone number that you don’t want them to call. I have found that sites with “average rates” don’t help much if you can’t see the real costs that go along with it. Every rate has a corresponding cost.
Lendingtree has gone down hill. 6 years ago i recieved real time quotes and could compare lenders. Now they claim they’ll give you real time quotes from various lenders so you can compare, but they just pick 3 big banks to give you (not very good) quotes from and sell your number to tons of random finanical firms to flood you with robo calls
Much better off calling local brokers.. and hint: ask if their lender fee is the same as their seller fee. Many brokers will give you a significant discount if you ask for it and are willing to pay their compensation (they cant discount lender fee because that is already set with lender for all their business)
Thanks for clarifying that you do get a commission. Just note that we get bombarded if we try to get a quote from them. It’s not ideal for a quote and see where the market is but great if one is actively shopping around. Thanks again!
Yes I have been running into the same situation when I try and get refinance quotes. before I finish putting in the online information I get emails and phone calls. Not only from Lending Tree but from most of the online sites and trust me they will run a credit check without telling you or getting permission. It has happened to me but I they couldn’t get into my file because they are frozen. I know they need to see it but let me know first. Lol. When i am ready I will unfreeze my credit and let them inquire my file to death but this seems the only way to see the real costs. I’m going to probably wait a little and see if rates will drop more with the trade wars situation going on before unlocking my credit and getting real quotes.