Is Now the Time to Refinance Your Mortgage?
Audio version available here (1 min. 40 sec.)
Ever since mortgage rates have started decreasing from a peak of nearly 8% in November of 2023, many homeowners have decided to refinance in mid 2024. In fact, refinancing demand has risen 94% from last year, but is now really the best time to refinance?
While mortgage rates are currently nowhere near the unprecedented 7.95% seen in November of 2023, the average 30-year fixed mortgage is 6.43%, decreasing just slightly from 6.44% last week. This has caused many homeowners currently stuck with extreme rates to apply for refinancing. This currently outpaces the growth for new mortgage applications to purchase a home, which grew only 3% and lags behind last year by 4%. With house prices increasingly unaffordable, averaging over $350,000 in Texas, it’s easy to see why homeowners are choosing to refinance over looking for a new home.
But is refinancing now the best move? While refinancing to a lower rate is great if you need to lower your monthly payment, making the move to do so now may not be as beneficial as waiting a bit longer. Many have been keeping an eye on the Federal Reserve as it teases a rate drop in the near future, which can greatly influence the US economy. However, those hopeful for a huge drop are likely to be disappointed. Amid fears of a US recession, it’s more likely the Fed will be conservative and take rate drops at a slow and steady pace. This can lead to rates still being quite high towards the end of 2024. For homeowners, it could mean being stuck with a high mortgage for quite some time.
Still, if your goal is to lower monthly payments, refinancing may be in your best interest. Just keep in mind that mortgage rates aren’t dropping down to 2020’s 3.38% average any time soon. As you prepare to make a decision as big as refinancing, it’s best to keep an eye on the news for updates on interest rates. Stay informed by keeping up with the XQ CPA blog for daily posts.
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