Refinance Activity Expected to Rise Amid Lowering Mortgage Rates

Freddie Mac reported that the average interest rate on a 30-year fixed mortgage hit a 10-month low of 6.56 percent, potentially opening the door for 2 million homeowners to refinance their mortgages. The Wall Street Journal notes that if mortgage rates fell to 6 percent, that number could climb to 6 million homeowners.  Refinancing applications were up 19 percent from the prior year, with over half of the refinancings in the last quarter used for cash-out refinances. Mortgage recasting, where a homeowner makes a large one-time lump sum payment on the mortgage principal to reduce ongoing mortgage payments, is being used more frequently by borrowers for whom refinancing is not an economic option. 

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