Homeowners Rush to Refinance High Interest Rate Mortgages
January 29th, 2008 at 01:38pm Under 30 year mortgage+ foreclosure+ mortgage rates+ mortgage refinancing
Fed’s mortgage rate cuts have proven effective, at least in the short run, by holding Wall Street and investors in thrall while at the same time creating an urgency for homeowners to refinance their high interest rate mortgages.
As a rule, for a mortgage to be worthy of refinancing, the current interest rate should be 0.40 percentage points or more below the existing mortgage rate. With the current interest rate on a 30-year fixed-rate mortgage at an average of 5.57, it has now made up to 7 million mortgages (or a whopping 70% of US mortgages!) “refinanceable”.
The Mortgae Bankers Association said home mortgage refinancing reached their highest levels since April 2004. The rush to refinance could get a further boost from President Bush’s Economic Stimulus Package. The package would allow government sponsored Fannie-Mae and Freddie-Mac to buy mortgages worth $729,750. Both Fannie-Mae and Freddie-Mac were bound by a cap of $417,000. This would make refinancing more feasible for owners of more expensive mortgages as well.
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Tags: 30 year mortgage, fed rate cuts, mortgage rates, mortgage refinancing
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