Homeowners are in another borrowing blitz.
Applications for mortgage refinance loans have risen sharply as history's lowest mortgage rates have persuaded more Americans that it's time to replace their old home loans with new ones that are much cheaper.
But other new research shows that millions of mortgage holders are still out there who haven't yet refinanced — and they could, as a group, save billions.
Refinancing is on the rebound
Overall mortgage applications rose 9.3% in the week ending June 5, led by an 11% jump in homeowner requests for refinance loans, the Mortgage Bankers Association reported on Wednesday.
Last week's gain was the first for refinance applications in nearly two months, and demand for refi loans was up 80% compared to the same week in 2019. Refinance requests last week made up 61.3% of all mortgage applications, an increase from 59.5 percent the previous week.
Homebuyers have stepped up their borrowing, too, as applications for "purchase mortgages" climbed 5% and were 13% higher than a year ago.
"Fueled again by low mortgage rates, pent-up demand from earlier this spring, and states reopening across the country, purchase mortgage applications and refinances both increased," says Joel Kan, associate vice president of forecasting for the Mortgage Bankers Association.
Though the mortgage bankers say their survey shows rates on 30-year fixed-rate mortgages are averaging 3.38%, Thursday's new study from mortgage company Freddie Mac puts the typical rate at 3.21% — just a couple of notches above an all-time low.
And, rates below 3% are around, if you look hard enough for them and meet the qualifications.
Millions of homeowners still need to refi
The economic upheaval from the coronavirus has had mortgage rates tumbling for months, and homeowners have been seizing the opportunity to refinance their loans and save big, even if their existing mortgages are only a year old.
A study from LendingTree early this spring said home loans taken out in 2020 were saving consumers $60 a month for every $100,000 borrowed, compared to mortgages from the first months of 2019.
But many homeowners still haven't taken advantage of today's cellar-dwelling mortgage rates.
New research from the mortgage data firm Black Knight estimates that 14 million mortgage holders are good refinance candidates and altogether could save $3.95 billion a month by swapping out their home loans.
That's an average $282 per person in monthly mortgage savings, which Black Knight calls "significant economic stimulus." The potential savings come at a welcome time for homeowners, as the coronavirus recession hits household budgets hard.
The firm defines refi candidates as owners who have 30-year mortgages, credit scores of 720 or better, at least 20% equity in their homes, and current mortgage rates that could be reduced by at least three-quarters of 1 percentage point (0.75) through a refinance.
You could easily lower your rate by that much if you haven't refinanced in a while. To find the lowest rate available to you, experts say be sure to review mortgage offers from multiple lenders, because often there can be wide spreads in the rates offered by different lenders.