2024 Mortgage Refinance Market Approach
With interest rates having stayed mostly above 7% for much of the last two years, the mortgage refinance market hasn’t seen much activity simply because the majority of American homeowners already had mortgages with lower interest rates. But in 2024, signs are pointing to a more balanced housing market and lower interest rates are expected to play a role.
At the start of February, the 10-year fixed, 15-year fixed, and 30-year fixed refinances all saw their average rates decrease. At the time of this writing, they were recorded as being:
- 30-year fixed refinance: 6.91%
- 15-year fixed refinance: 6.22%
- 10-year fixed refinance: 6.04%
Thanks largely in part to slowing inflation, the Federal Reserve’s projected interest rate cuts are expected to continue to push mortgage interest rates down to around 6% by the end of the year.
Is 6% Low Enough to Boost the Refinance Market?
Any drop in the interest rate is cause for celebration, but just how much can homeowners expect a drop all the way down to 6% to impact the refinance market? The truth is, over 82% of American homeowners currently have interest rates below 5% on their property. Lower home loan rates will help stabilize the market over the next several months, but for refinance applications to pick up in a meaningful way, the rates would most likely need to fall substantially farther.
That said, the remaining 18% of homeowners may be able to save money through refinancing in 2024. There will also certainly be some homeowners with current interest rates near 6% who may want to access their home equity for a variety of different purposes, and taking a slight increase in their interest rate may be worth it to them.
Additional Interest Rate Factors
If you are thinking about refinancing in 2024, then it is important for you to realize that the national refinance rate isn’t guaranteed to be the same thing as your personal interest rate. Your personal rate will be impacted by several factors that are unique to your situation, including your credit score and history, your financial profile, and your application. For instance, if your credit score has gone down since you closed on your current mortgage, then you most likely won’t be able to qualify for a rate any lower than the one you already have.
When Will Be The Best Time to Refinance a Mortgage in 2024?
Hitting the proverbial “nail on the head” when refinancing isn’t an exact science. While all signs are pointing to a drop in the rate this year, you just can’t time the market. The reality is interest rates fluctuate on a weekly, daily, and even hourly basis. The reason is because the interest rate is influenced by such a wide array of macroeconomic factors. As a result, pinpointing when will be the best time to refinance with any kind of accuracy is almost near to impossible.
If you want to refinance this year, then your best move will be to keep your eyes on the day-to-day rate changes, so you can have a general idea of what direction the rate is moving. You should also have a game plan ready to follow, so you can capitalize on a big enough percentage drop the moment it happens and before it changes direction.
This means that in the meantime you should be doing all the leg work you need to be prepared to refinance your home loan, including checking and cleaning up your credit reports, paying off debts, saving money for your closing costs, and more.
The more prepared you are and the faster you can act, the better the chances will be that you will secure the lower interest rate that you’re aiming for.
