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February 6, 2020 | It’s Likely You Can Refinance Your Mortgage At a Lower Rate

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Mortgage rates are approaching record lows. Investigate refinancing.
If you have a mortgage, do yourself a favor and check out if it makes sense to refinance.My contact at Black Knight pinged me this morning with these observations:

  • The Freddie Mac 30-year average is now 3.45%, the lowest level in almost 3.5 years and just 14 BPS above all-time lows.
  • This pushed the number of high-quality refinance candidates to approximately 11.3M, for an aggregate potential monthly savings of $3B – both the highest on record outside of a single week last September when rates also fell below 3.5% for a brief period.
  • About 1.1 million homeowners could save $500 per month or more through a refi into a new 30-year fixed loan.

December Mortgage Monitor

Here is the charts from the Black Knight December Mortgage Monitor.

The bullet points above are more current than the chart.

As of December, those refinancing s could save $264 per month, for an aggregate monthly savings of nearly $2.5 billion. The aggregate savings is now $3 billion.

Home Price Appreciation

Black Knight comments that low mortgage rates makes home more affordable.

I disagree. Prices have dramatically outstripped wage growth as most looking to buy a home understand.

Refinance Smartly

If you refinance, do so smartly. This is what I suggest.

  • Don’t take money out to spend it.
  • Don’t extend the length of the loan. Just refinance what is left.
  • Do take this opportunity to deleverage.

If you have credit card debt, pay it off, perhaps with some cash back, but don’t rack it up again.

Mike “Mish” Shedlock

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February 6th, 2020

Posted In: Mish Talk

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