Marketplace has a new podcast for kids, "Million Bazillion!" EPISODE OUT NOW

Low mortgage rates spur many to refinance

Justin Ho Jul 17, 2020
Heard on:
HTML EMBED:
COPY
Mortgage finance company Freddie Mac says rates on 30-year fixed mortgages fell below 3% this week. For some people, that's a chance to refinance. Win McNamee/Getty Images

Low mortgage rates spur many to refinance

Justin Ho Jul 17, 2020
Heard on:
Mortgage finance company Freddie Mac says rates on 30-year fixed mortgages fell below 3% this week. For some people, that's a chance to refinance. Win McNamee/Getty Images
HTML EMBED:
COPY

The rate on a 30-year fixed mortgage fell below 3% this week, according to mortgage finance company Freddie Mac. This is the first time that’s happened in the past 50 years. For some people, it’s an opportunity to refinance their existing mortgages.

To lock in these low rates, Fannie Mae chief economist Doug Duncan says people will refinance almost two trillion dollars worth of mortgages this year, and could refinance another trillion in 2021.

“Those are huge volumes of people taking advantage of an opportunity to lower their monthly costs,” he says.

Banks and mortgage companies earn fees when people refinance, but Duncan says companies have had trouble keeping up with demand.

If by next year, companies figure out how to better handle the wave of refinancing, Duncan adds that “mortgage rates are probably likely to get in the 2.75 percent range.”

Not everyone can take advantage of low rates, and with the pandemic, there aren’t many homes for sale right now for anyone looking to buy.

Mark Fleming, chief economist at First American, says “everyone’s in big bidding wars over the few that are out there,” but also notes that home owners don’t have many incentives to sell when they can lock in cheap rates as well.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.