Low Mortgage Rates Increase Refinance Activity

Extremely low refinance rates are fueling refinance demand as homeowners take advantage of rates that are better than expected. In Freddie Mac's First Quarter of 2015 Refinance Report, refinance loans accounted for 63 percent of all single family home loan originations.

Mortgage rates are still low, historically speaking, though rates increased this past week. Today's mortgage rates on 30 year loans are averaging 3.87 percent, up from the prior week's average 30 year rate of 3.78 percent. Despite the increase, 30 year mortgage rates are still only 0.50 percent higher than the all-time record low of 3.35 percent set in May 2013.

Higher home prices the past several years has increased cash-out refinances. Approximately 27 percent of borrowers increased their loan amount when refinancing. Borrowers either cashed out some equity or consolidated loans when refinancing.

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

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The lenders whose rates and other terms appear on this chart are ICB's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #2006915

License: 60DBO-149268

5.582%

15-Year Fixed

5.375%

$5,417

Includes 0.868 points for $3,472

Lender Fees: $1,945

$3,242 /mo

Next >

NMLS #1835285

5.645%

15-Year Fixed

5.500%

$3,772

Includes 0.943 points for $3,772

Lender Fees: $0

$3,269 /mo

Next >

NMLS #401822

5.661%

15-Year Fixed

5.375%

$7,500

Includes 0.875 points for $3,500

Lender Fees: $4,000

$3,242 /mo

Next >

NMLS #1025894

5.667%

15-Year Fixed

5.490%

$4,616

Includes 0.979 points for $3,916

Lender Fees: $700

$3,267 /mo

Next >

NMLS #2326098

License: 60DBO-181478

5.674%

15-Year Fixed

5.500%

$4,725

Includes 0.693 points for $2,772

Lender Fees: $1,953

$3,269 /mo

Next >

NMLS #2059741

5.728%

15-Year Fixed

5.500%

$5,960

Includes 0.990 points for $3,960

Lender Fees: $2,000

$3,269 /mo

Next >

NMLS #757416

5.746%

15-Year Fixed

5.625%

$3,136

Includes 0.784 points for $3,136

Lender Fees: $0

$3,295 /mo

Next >

NMLS #2627028

5.782%

15-Year Fixed

5.625%

$4,171

Includes 0.720 points for $2,880

Lender Fees: $1,291

$3,295 /mo

Next >

NMLS #1701910

5.808%

15-Year Fixed

5.750%

$1,490

Includes 0.000 points for $0

Lender Fees: $1,490

$3,322 /mo

Next >

NMLS #2326098

License: 60DBO-181478

6.505%

5-Year ARM

6.375%

$5,641

Includes 0.922 points for $3,688

Lender Fees: $1,953

$2,496 /mo

Next >

NMLS #2006915

License: 60DBO-149268

6.507%

5-Year ARM

6.375%

$5,565

Includes 0.905 points for $3,620

Lender Fees: $1,945

$2,496 /mo

Next >

NMLS #1835285

6.572%

30-Year Fixed

6.500%

$3,000

Includes 0.750 points for $3,000

Lender Fees: $0

$2,529 /mo

Next >

NMLS #757416

6.589%

30-Year Fixed

6.500%

$3,696

Includes 0.924 points for $3,696

Lender Fees: $0

$2,529 /mo

Next >

NMLS #1835285

6.590%

5-Year ARM

6.500%

$3,740

Includes 0.935 points for $3,740

Lender Fees: $0

$2,529 /mo

Next >

NMLS #2561451

6.600%

30-Year Fixed

6.490%

$4,655

Includes 0.665 points for $2,660

Lender Fees: $1,995

$2,526 /mo

Next >

NMLS #2006915

License: 60DBO-149268

6.618%

30-Year Fixed

6.500%

$4,945

Includes 0.750 points for $3,000

Lender Fees: $1,945

$2,529 /mo

Next >

NMLS #2059741

6.628%

30-Year Fixed

6.490%

$5,772

Includes 0.943 points for $3,772

Lender Fees: $2,000

$2,526 /mo

Next >

NMLS #1025894

6.727%

30-Year Fixed

6.625%

$4,204

Includes 0.876 points for $3,504

Lender Fees: $700

$2,562 /mo

Next >

NMLS #399799

6.728%

30-Year Fixed

6.625%

$4,416

Includes 0.772 points for $3,088

Lender Fees: $1,328

$2,562 /mo

Next >

NMLS #2627028

6.729%

30-Year Fixed

6.625%

$4,391

Includes 0.775 points for $3,100

Lender Fees: $1,291

$2,562 /mo

Next >

NMLS #2326098

License: 60DBO-181478

6.740%

30-Year Fixed

6.625%

$4,941

Includes 0.747 points for $2,988

Lender Fees: $1,953

$2,562 /mo

Next >

NMLS #401822

6.758%

30-Year Fixed

6.625%

$5,495

Includes 0.875 points for $3,500

Lender Fees: $1,995

$2,562 /mo

Next >

NMLS #1701910

6.786%

30-Year Fixed

6.750%

$1,490

Includes 0.000 points for $0

Lender Fees: $1,490

$2,595 /mo

Next >

NMLS #3030

6.889%

15-Year Fixed

6.750%

$3,500

Includes 0.875 points for $3,500

Lender Fees: $0

$3,540 /mo

Next >

NMLS #3030

7.602%

30-Year Fixed

7.500%

$4,000

Includes 1.000 points for $4,000

Lender Fees: $0

$2,797 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

During the height of the housing bubble when the home was treated as a piggy bank, 89 percent of borrowers increased their loan amount when refinancing. Even if home prices continue to rise, the percentage of borrowers doing a cash-out refinancing will never be that high again as a result of more stringent loan requirements.

34 percent of borrowers who refinanced in the first quarter refinanced to a shorter loan term. Refinancing to a 15 year loan from a 30 year loan can save tens of thousands, if not hundreds of thousands of dollars with a shorter term loan.

Mortgage rates today on 15 year conforming loans are averaging 3.01 percent, 86 basis points lower than conforming 30 year rates. If you can afford the higher monthly mortgage payments that come with a shorter term loan, you should seriously consider it for the savings. Unfortunately, many people assume they can't afford the higher monthly payments without actually looking into the numbers to see if it is feasible or worth some belt-tightening adjustments.

The average mortgage interest rate reduction on refinances in the first quarter was 1.2 percent. That translates into an annual savings of about $5,000 in mortgage interest on a $400,000 home loan.

An overwhelming majority of borrowers chose a fixed-rate mortgage when refinancing. More than 95 percent of borrowers choose a fixed-rate mortgage regardless of what their original loan had been. 76 percent of borrowers who had an adjustable loan refinanced into a fixed-rate loan.

Freddie Mac estimates that borrowers who refinanced in the first quarter of 2015 will collectively saved more than $1.4 billion in interest payments over the first year of their new loan.

By the end of 2015, 30 year refinance rates will likely be between 4.50 percent and 5.00 percent. Rates will also continue to increase in 2016 and beyond. If you're considering refinancing your loan, now is the time to do so. Likewise if you're thinking financing the purchase of a home, you should do so before rates move higher.

Not only are mortgage rates moving higher in the coming years, home prices will also continue to rise. The increase in home prices has accelerated recently because of the shortage of homes available for sale. Realtor.com reported home prices are going up faster than they were just a few months ago.

With rates and home prices continuing to increase, now is the time to look closely into your refinancing and purchasing options.