Mortgage rates on 30-year, fixed loans dropped 0.7 points this week, hitting 3.51% on average, according to Freddie Mac.
It’s the lowest rate seen since September last year—when rates hit 3.49%—and the second-lowest rate since mid-2016.
According to Joel Kan, the associate vice president of economic and industry forecasting for the Mortgage Bankers Association, the decrease was largely due to investor uncertainty surrounding the coronavirus, as well as trade-related and geopolitical concerns.
Whatever the reason, the rate drop caused an 8% uptick in refinancing activity and a 5% jump in purchase applications. Refi activity is now 146% higher than it was this time last year.
It’s no wonder, either. According to analysis from data and analytics firm Black Knight, the average homeowner can save $272 per month by refinancing their mortgage loan today. And the total refinanceable population based on Freddie Mac’s latest rate data? That’s a whopping 9.43 million homeowners.
Black Knight’s analysts say the aggregate $2.57 billion those homeowners could save is nearing an all-time high. And even recent homeowners—including 3 million who took out their mortgages in the last three years—could join in, shaving 0.75% or more off their interest rate.
It’s a good thing, too. A recent survey from loan marketplace LendingTree shows that 16% of Millennial homeowners are planning to refinance this year. Another one in five plans to do so in the next two to five years.
Gen Xers are also eyeing refinances. The same survey shows that 15% of Gen X homeowners are planning to refinance in 2020, while another 18% say they will in the next decade.
For borrowers who do decide to take the leap and refinance now, Freddie Mac’s Chief Economist Sam Khater says there are serious benefits waiting in the wings.
“Borrowers who take advantage of these low rates can improve their cash flow by lowering their monthly mortgage payments, giving them more money to spend or save,” Khater says.
Follow me on Twitter or LinkedIn. Check out my website.