Recent mortgage industry reports show that refinancing activity is on the rise. With rising home prices and relatively low interest rates, 2018 could be a good time to refinance a home in Washington State.
Refinancing Activity Increases in Washington State
According to the latest application survey from the Mortgage Bankers Association (MBA), a higher number of homeowners in Washington State and nationwide are refinancing their mortgage loans.
On November 8, 2017, the industry group reported:
“The refinance share of mortgage activity increased to 49.0 percent of total applications from 48.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6 percent of total applications.”
We are currently seeing one of the highest rates of mortgage refinancing in Washington State and across the country, and lower borrowing costs have a lot to do with it. Mortgage interest rates have been hovering at relatively low levels for months now. This has brought more homeowners into the refinancing market.
Low Mortgage Rates Remain Attractive
According to the weekly survey conducted by Freddie Mac, the average rate for a 30-year fixed home loan fell to 3.90% for the week of November 9, 2017. The average rate for a 150year fixed mortgage loan (another popular product among refinancing homeowners) dropped to 3.24% during the same week.
The average rate for a 30-year loan in Washington State and across the country has been hovering below 4% since mid July 2017. If interest rates continue to hover at these low levels, we could see a higher number of Washington homeowners refinancing their mortgage loans in 2018.
Washington Home Prices Up by Double Digits in 2017
Homeowners across the state of Washington have seen their home values rise over the last few years. That’s a bit of an understatement. During 2016 and into 2017, Washington experienced the highest rate of home-price appreciation of any state in the country.
According to the real estate information company Zillow, house values in the state rose by 11% from November 2016 to November 2017. And while home prices are expected to slow down a bit over the coming months, they will likely continue rising to some degree throughout 2018.
This is another factor contributing to the rise of mortgage refinancing in Washington, and it could cause many homeowners to seek a refinance loan in 2018. Rising home values boost equity levels for homeowners. So these trends could increase the number of Washington State homeowners who are eligible for refinancing in 2018.
Does Refinancing in 2018 Makes Sense for You?
Homeowners refinance their homes for different reasons. Some do it to convert equity into cash, while others do it to pay off their mortgages sooner.
But the most common reason for refinancing in Washington is to secure a lower mortgage rate, and thereby reduce the size of the monthly payments. If this is your primary goal, you have to do the math to determine if a refinance loan will work to your advantage.
If saving money is your goal, you’ll want to calculate the breakeven point. This is the point at which the money you save each month from a lower rate begins to exceed the money you paid in closing costs. If you stay in the home (and keep the new loan) beyond this breakeven point, refinancing could work to your advantage.