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Mortgage rates have been declining, making conditions favorable for some homeowners to refinance, experts say.
The average 30-year fixed-rate mortgage was 6.58% for the week ended Thursday, Aug.14, down from 6.63% the week prior, according to Freddie Mac.
Mortgage rates have come down a point and a half from October 2023, when rates almost hit 8%, according to Jessica Lautz, deputy chief economist at the National Association of Realtors.
“That’s a ample improvement,” said Lautz.
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Lower mortgage rates often result in lower borrowing costs for home loans. Many homeowners have already jumped on the opportunity.
“Refinance applications increased to their strongest pace in four weeks,” Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, said in an Aug. 6 report. The share of refinance applications increased to roughly 42% of total applications, the highest level since April, according to the findings.
While most homeowners have mortgage rates that are too low to benefit, about 18.8% of outstanding mortgages have interest rates of 6% or higher, according to Realtor.com.
Homeowners who bought their properties in recent years when rates were high may want to consider refinancing, experts say.
“A much more common mistake is for people to not realise when rates have dropped that they had an opportunity to refinance and to take advantage of it,” said Chen Zhao, head of economics research at Redfin.
Why mortgage rates have been declining
Mortgage rates have been falling in recent months. In May, the 30-year mortgage rate peaked at 6.89%, according to Freddie Mac data. The rate has been on a bumpy slope since than.