(Multibagger) - The interest rate for the most popular U.S. home loan hit a two-year low last week, dropping to 6.13%, according to data from the Mortgage Bankers Association. Refinancing activity surged as a result.
The average contract rate on a 30-year fixed-rate mortgage fell by 2 basis points in the week ending Sept. 20, a smaller decrease than the Federal Reserve's recent half-point rate cut. Despite this, mortgage rates had been decreasing prior to the Fed's decision and are now significantly lower than they were in July and October 2023.
Homeowners seized the opportunity to refinance their existing loans as rates dropped, with refinancing applications now making up over 57% of all mortgage applications, surpassing the historic median of 48%.
Now, let's break it down. The interest rate for the most popular U.S. home loan dropped to a two-year low of 6.13%, making it an attractive time for homeowners to refinance their mortgages. The Federal Reserve's recent rate cut contributed to the decline in mortgage rates, leading to a surge in refinancing activity. This presents an opportunity for homeowners to lower their monthly payments and potentially save money in the long run. If you're a homeowner looking to reduce your mortgage costs, now might be the perfect time to consider refinancing.