Federal Reserve announcement, sluggish economic growth push home loan rates lower
As America celebrated the first day of spring last week, Federal Reserve Chairman Jerome Powell announced some more good news - there will be no more interest rate hikes in 2019. Home buyers and realtors rejoiced at the news, which came just at the start of the prime home buying season.
Not surprisingly, the financial markets responded enthusiastically to the news, so much so that home loan rates enjoyed their biggest one-week decline in over a decade. But the real winners of this March Madness may prove to be those homeowners who take advantage of the lower home loan rates and refinance. In doing so, many of them will pull out cash at the same time to pay off high interest rate debts such as credit cards and in the process significantly boost their monthly cash flow by hundreds of dollars each month.
Cash-out refinancing has suddenly become all the rage, especially for homeowners who have been waiting to tap their home equity to pay off household debts and who are getting a smaller IRS tax refund this year. Many of these homeowners had been discouraged by higher mortgage rates last year, which climbed to a seven-year high in November. But make no mistake - mortgage rates dropped significantly last week. According to Freddie Mac, 30-year fixed rates dropped to 4.28%, their lowest level in 14 months.
Clearly, there’s money to be made. With higher property values in many parts of the country, thousands of homeowners can now refinance and access their home equity to pay off debts and increase their monthly cash flow. Credit card interest rates, which have been increasing for the past year stubbornly refused to go down last week, making it even more attractive for homeowners to refinance and get a low fixed rate on their home loan and pay off their credit card balances at the same time. Many of these cash out refinances will add over $1,000 per month in cash flow to homeowners’ monthly budgets, which is quite significant.
As homeowners rush to take advantage of lower home loan rates and get a cash-out refinance, fewer and fewer of them are considering taking out a home equity line of credit (HELOC), and for good reason. Interest rates for home equity lines of credit, which almost every bank offers to their customers, remain high and when you take into account the fact that most HELOCs come with risky adjustable rate features and the inconvenience of making two mortgage payments instead of one, the decision to do a cash-out refinance becomes very easy.
This spring, take advantage of the good news about home loan rates and take a close look at cash-out refinancing. Nutter Home Loans, a national mortgage lender specializing in home loan refinancing since 1951, offers their Nutter Cash Back Refinance™ at very competitive interest rates and low closing costs. Get more information about our cash back refinancing.
- Nutter’s Home Refinancing Guide
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- Today’s mortgage rates
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