“It only makes sense to consider refinancing if mortgage rates drop two percentage points below your current mortgage,” McCoy said. “If somebody’s current mortgage is at 6%, it would probably only make sense to refinance if mortgage rates fall down to 4% or lower, and we’re a long way from that.”
Fed waiting to cut
The potential for lower mortgage rates is also tied to expectations that the Federal Reserve may soon start cutting interest rates.
However, the timing and extent of these cuts – and their impact on the housing market – remain uncertain.
Recent data showed that existing home sales have been declining, with a drop recorded for four straight months as of June. Analysts suggest that if the Fed begins to ease its monetary policy, the housing market might see a slight recovery later this year.
Since the Fed started raising rates in early 2022 to combat inflation, mortgage rates have more than doubled, reaching levels not seen in over two decades. This increase, combined with high home prices, has significantly dampened demand for home loans.
Source: mpamag.com