- Credit: The Boston Globe
A mini refinancing boom has come about in recent weeks as homeowners are ecstatic about the ultra lowering interest rates. According to Freddie Mac, The Federal Loan Mortgage Corporation, the average rate on a 30-year loan fell to 3.63 percent and a 15-year mortgage dropped to 2.93 percent just last week.
Reminiscing on our undergraduate basic Macro Economics class, we know that the US economy flourishes when spending’s increase. So with recent gas prices and interest rates dropping, it comes with no surprise that consumers are more able and eager to spend some of their higher pockets of earnings, which in turn creates more generosity of lending by banks.
With banks becoming more gracious about lending, offering what is referred to as cash-out refinancing’s – homeowners tap equity by borrowing more than they owe on their mortgages. And ironically, an incredible amount of consumers are now choosing to spend this additional cash flow on updating their homes opposed to paying off their homes.
To explore the world of refinancing is highly advised. Advise from none other than the President of Chelsea-based Metro Credit Union, Robert Cashman, stated, “Now is the time if someone hasn’t had the opportunity, if they haven’t had the chance to refinance.”
And people are taking this advice, moving full speed ahead. According to the Mortgage Bankers Association, refinancing applications jumped 22 percent for the week ended Jan. 16, after surging 66 percent the previous week.
It is forecasted by Patrick Newport, an economist with IHS Global Insight, that the interest rates are predicted to maybe rise later this year, but when exactly is still uncertain.