Mortgage rates at historic lows as refinancing soars

Freddie Mac recently reported that the average 30-year fixed-rate mortgage is currently at 4.3 percent, leading homeowners and borrowers to refinance their mortgages or apply for loans. Greg McBride, senior analyst for Bankrate.com, said people with larger mortgages should take advantage of the low rates and refinance before the new loan limits kick in on October 1st.

In an interview with the LA Times, McBride pointed out the conforming loan limit will drop in October to $625,500 from $729,750, while loans larger than the limit will have higher rates. If a homeowner has a larger loan and is refinancing, they will need 25 percent to 30 percent equity in their homes, compared to 20 percent for smaller loans.

The Mortgage Bankers Association's latest Weekly Mortgage Application Survey found mortgage applications increased 21.7 percent and refinancing activity increased 30.4 percent from the week before. However, applications for home purchases decreased slightly by 0.9 percent, remaining mostly unchanged throughout the summer.

Mark Zandi, chief economist at Moody's Analytics, told USA Today that more money in homeowner pockets from refinancing could help the economy and the low rates could spur some home sales. Still, Zandi anticipates the housing market will get hit hard after the stock market's recent fluctuations and the continued weak consumer confidence.  

More News