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Mortgage rates are soaring. Is it still OK to refinance your home?

Yahoo Finance's Dani Romero joins the Live show to discuss the rise in mortgage rates and why refinancing could be beneficial to home owners.

Video Transcript

JARED BLIKRE: Welcome back. With mortgage rates at their highest levels in 20 years, does it make sense for homeowners to refinance? Now, some experts think it might. And joining me now to discuss is Yahoo! Finance's Dani Romero. And Dani, when I saw this, I was thinking, wow, that-- the math may not work out for most people but maybe some here.

DANI ROMERO: Yeah, so there are a few reasons why someone would benefit from refinancing. The first is someone who's struggling with their finances. So people who want to consolidate their debt by using a-- their mortgage rate as a way to overall lower their overall debt cost.

Secondly, would be someone who's seeking cash, who wants to use the cash out refinance option, meaning which it allows them to access equity that they've built on their home. And lastly, someone who would benefit from refinancing is someone who's dealing with the end of their fixed-rate term on their adjustable rate mortgage.

So that means that if they locked in at that 7.8-- 7.08% mortgage rate, that means that their monthly payments later on in the future, they won't increase. So those are a few reasons why someone would benefit from refinancing, especially under this current environment.

And Black Knight came out with data that says that there are about 133,000 homeowners that are eligible to lower their monthly payments by $325 by lowering their rate to 7.08%. And that population of homeowners got their mortgage in 2008 or before.

JARED BLIKRE: Now, having said all that, I want to talk about the lending side. Volumes are down. We know that prices are sticky. People might be balking and saying, oh, I can't afford that house. What's happening with the lending side right now?

DANI ROMERO: Yeah, Jared, you said it, left and right, we've heard from different mortgage companies that they are scaling back. They're also laying off their employees due to the lack and demand for mortgages.

I mean, data shows us that applications for mortgages is down 86% this year, compared to last year, excuse me. Also, revenue is down for a lot of these mortgage companies as higher interest rates become really costly for them. And there's even been some lenders who deal with riskier loans that have said, sayonara, I'm no longer going to operate any more.

So yes, it is a really grim picture for the lending side. But I spoke with a loan manager who says, she's very optimistic even though they are facing these headwinds, especially. But she said that she's really betting that interest rates, mortgage rates will turn around.

JARED BLIKRE: Dani, we got another minute or two here. You talk to a lot of people. You've got boots on the ground. You go around interviewing people, talk to small business owners. What are they saying? It doesn't have to be, with respect, necessary to lending. It can be about peculiarities of their business. But what's the tone on the Street in terms of some of the business owners that you're talking to?

DANI ROMERO: Some of them that I've, you know, just spoken to, you know, inflation. I mean, we-- that word gets thrown around. It's something that they're constantly dealing with. Also employment. I mean, you know, we just saw those numbers just yesterday from the JOLTS, I mean, reports.

So we're really seeing that they are dealing with a lot of these macroeconomic topics that we talk about on a daily, right? But I mean, it really-- we have a big decision coming up. We were just talking about that earlier, about the Fed.

JARED BLIKRE: Yes, two hours and counting.

DANI ROMERO: You're counting it. I mean, a lot of people are counting it. And I think we have to really showcase that, you know, this trickles down to anybody. Right? We will feel the impacts. Small business owners will feel the impacts. Home buying, homeowners, they will also be feeling the impacts on whatever the decision may be in the next two hours or so.

JARED BLIKRE: Yes, yes.

DANI ROMERO: So you say.

JARED BLIKRE: In two hours-- two and half hours to the fireworks, that would be the Powell presser. Keep it tuned. All right, thank you for that, Dani Romero.