Why Are So Many Homeowners Suddenly in the Market to Refinance?

The perfect time to refinance will usually vary among homeowners. However, when certain economic indicators point toward market improvements that could benefit millions of homeowners, it is wise to obtain some additional insight. Borrowers who are fortunate enough to capitalize on the sudden drop in mortgage interest rates may be in the market for several financial enhancements.  

Why Are Mortgage Interest Rates Falling?

Prices for mortgage interest rates are based on activity in the bond market.  

When the economy is stable, interest rates may trend slightly higher or lower in a typical week. Although, when economic conditions are rapidly improving, mortgage interest rates are likely to increase.

Conversely, as the economy begins to stall or dismal forecasts are projected, rates will generally decrease for 30-year fixed-rate mortgages.  

Homeowners Could Benefit from a 30-Year Fixed-Rate Mortgage Refinance

According to Black Knight, nearly five million homeowners might be able to refinance for a lower mortgage interest rate. The analytics firm estimates that qualified borrowers may be eligible to receive a new mortgage rate that is three-quarters of a percentage point lower than interest rates that were obtained prior to March of 2019.    

So, what are the benefits?

When a lower mortgage interest rate is obtained to pay off an existing home loan, a borrower could potentially save money via lower monthly payments on a 30-year fixed-rate mortgage.

A lower 30-year mortgage rate might also provide improved pricing for a 15-year fixed-rate mortgage. Therefore, a borrower who wants to pay off a home loan with a shorter term may be able to take advantage of the sudden market improvements.   

Additionally, a borrower who desires an opportunity for debt consolidation or to get money for home improvements may benefit from a cash-out refinance.

Savings from Refinancing an Existing Mortgage Loan

A modest improvement in mortgage interest rates can result in substantial savings. For a homeowner who qualifies for a lower mortgage rate, thousands of dollars in interest expense may be avoided. The savings may be applied toward other financial goals or toward a retirement savings account.   

For instance, a homeowner who obtained fixed-rate financing of 4.875 percent on a $600,000 mortgage loan for 30 years would be required to make monthly principal and interest payments of $3,175.

With an interest rate of 4.125 percent, a loan with the same balance and term would require the borrower to make monthly payments of $2,908.

The $267 monthly payment reduction amounts to $3,204 per year and to more than $96,000 over the course of a 30-year mortgage term.

Use our mortgage calculator to compute the savings for a specific loan balance and term or speak with one of our helpful lending experts about saving money on a home loan.

At Prospect Financial Group, we maintain a pulse on lending trends that impact housing affordability for our clients.

Contact us today to discuss buying a home or refinancing a mortgage loan in California with a licensed firm.  


Jason Vondrak

Company President

Prospect Financial Group

948 Garnet Avenue

San Diego, CA 92109

NMLS: 349089 | BRE: 01837707

Jason Vondrak has been in the mortgage industry since 2004 and co-founded the mortgage brokerage Prospect Financial Group in 2006 in San Diego, California. Today he serves as President and CEO of Prospect Financial Group and the president and founder of Prospect Property Group, a real estate development company, established in 2012.

“I’ve had the privilege to serve in an industry that exists to ensure homeownership remains among the top priorities of government and citizens alike. Over the years, it has been a pleasure working alongside homeowners, real estate professionals, and business associates combining efforts and teaming up to help homeowners realize the dream of home ownership.”