PHILADELPHIA (CBS) - If you’re looking to lower your monthly house payments, now might just be the time to act as mortgage rates have fallen again. 3 On Your Side Consumer Reporter Jim Donovan finds this is fueling a boom in refinancing.
According to the Mortgage Bankers Association, refinance applications jumped nearly 22 percent last week and made up more than 75 percent of all mortgage activity. That is because fixed mortgage rates are now at or near record lows.
The average rate for a 30-year fixed mortgage dropped to 4.32 percent this week. While 15-year fixed rates dropped to a new record low of 3.50 percent.
Greg McBride of Bankrate.com says the weak U.S. economy has helped to bring these fixed rates to record low levels. He says, “This is important because it opens the door for refinancing for a lot of people that may have missed that opportunity last fall when rates were at comparable levels.”
But just because the rates are low, doesn’t mean everyone will be able to take advantage of them.
According to McBride, “What you need to qualify is good credit, which most people have, proof of income, which most people have, and also either equity in a home, or money from a down payment and that is the sticking point for a lot of borrowers. The appraised values of homes are coming at levels that may prevent some people from refinancing, and for home purchasers the lack of a down payment can also be a barrier.”
In theory, low mortgage rates should also provide a boost to the troubled housing market. But the fact that banks are now insisting on higher credit scores and larger down payments doesn’t help home sales. For instance new home sales are on track with last year and that was the worst year on record dating back half a century.
Reported by Jim Donovan, CBS 3