Mortgage refinances surged in July, data shows: This is how homeowners can cash in

Home loan refinance activity is surging. Here's how homeowners can take advantage of low rates and increasing home prices.  (iStock)

A surge in mortgage refinancing activity took place in July, according to mortgage data provider Black Knight, due to uncertainty in the housing market caused by the coronavirus' Delta variant. The Biden administration’s decision to remove the controversial adverse market fee from refinances on loans backed by Fannie Mae and Freddie Mac also "undoubtedly boosted" refinance volumes during the month, the report states.

"The market’s uncertainty around rising Delta variant caseloads across the U.S. has helped push yields on the 10-year Treasury down to their lowest level since February," said Scott Happ, Black Knight secondary marketing technologies president. "This has, in turn, put downward pressure on mortgage interest rates, with our OBMMI daily interest rate tracker showing July’s month-end conforming 30-year at 2.99%, 17 basis points lower than the month prior."

Rate lock volume, indicating the amount of borrowers who locked in their mortgage rate, increased by 5.5% in July, according to the report. And now, the refinance share of the national market is at 50% after five months under it.

Read on to learn more about how refinancing your home loan could help you pay off debt in a shorter amount of time, and also help you save money to utilize elsewhere. Of course, it's important to weigh the pros and cons of a refi depending on your personal financial situation.

If you’ve decided that refinancing your home loan is the right option for you, visit Credible to find personalized rates and lenders all in one place. Click here to view today's featured refinance rates and view home loans based on APR, fees, and monthly payments depending on your loan amount.


A rise in refinances

The Black Knight report showed that amid a competitive homebuying market, mortgage purchases dropped by 7% in July. But that decline was more than offset by the increase in rate/term refinances and cash-out refinances, which went up by 24% and 20%, respectively. 

"While we didn’t see homeowners looking to refinance react as quickly or as strongly to such slight rate movements in the past few months, they certainly did so in July," Happ said, adding that with sub-3% interest rates, "a very early look at August lock data suggests more of the same in the month’s earliest days."

With rates slipping below 3% once again, homeowners could save hundreds on their monthly payments. Applying for a mortgage loan refinance is simple. Visit an online marketplace like Credible to get preapproved for your loan amount in minutes without affecting your credit score. 


Why now is a good time to refinance

It's important to keep in mind that there are a variety of market factors in play helping to create optimal conditions for homeowners to benefit from a mortgage refi. Some of them include: 

  1. Low interest rates
  2. Increased cash-out opportunity
  3. Reduced refinance fees

1. Low interest rates: Interest rates don't only impact the total amount you pay over the life of your home loan – they also affect your monthly payments. Rates are at historic lows, and acting quickly to take advantage of them can help you save potentially thousands of dollars in interest. 

Even those who bought a home near the beginning of the coronavirus pandemic could still save hundreds each month by refinancing into a sub-3% interest rate. Visit Credible to view a rates table that shows multiple lenders at once with different interest rate options to get borrowers a lower monthly payment. 

2. Increased cash-out opportunity: Homeowner equity surged in the second quarter of 2021. Now, the portion of "equity rich" homes – meaning that the amount owed on the home doesn't exceed 50% of its market value – increased to 34%, according to the latest report from ATTOM Data Solutions.

Last year, just 27.5% of homes were equity rich. This means that many more homeowners have the option to pull cash of their home’s equity to use toward home renovations or to pay down high-interest debt at a lower rate. 

"Instead of the virus pandemic harming homeowners, it’s helped create conditions that have boosted the balance sheets of households all across the country," ATTOM Chief Product Officer Todd Teta said in a statement.


3. Reduced refinance fees: The Black Knight report noted that the removal of the adverse market refinance fee helped spur mortgage refinance levels in July. While the fee was set to end on Aug. 1, 2021, many loans that began the month prior would close after that August start date, so lenders didn’t charge the fee.

The removal of the controversial fee helps save homeowners an average of $1,400 in refinance fees that were added to closing costs or put homeowners into a lower interest rate for those who chose to pay the fee over the loan term. 

If you are interested in seeing how much you can save on your monthly mortgage payment by refinancing your home loan, contact Credible to speak to a mortgage expert and get all of your questions answered

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