Mortgage Rates Remain Sky High. So Why Are Homeowners Refinancing? | Global News Avenue

More and more homeowners are refinancing their homes, which seems paradoxical even if mortgage rates keep rising.

Refinancing activity last week was 33% higher than the same period last year, according to the latest data from the Mortgage Bankers Association. Although mortgage rates hover at 7%. In contrast, mortgage applications for home purchases increased by more than 2% during the same period.

Experts say that despite rising house prices and increasing consumer debt, these figures strengthening refinancing for some homeowners may be worth it.

Why is it meaningful to some people with high speed financing

Many are leveraging a specific type of refinancing called “Cash refinancing. “In this type of refinancing, homeowners take out bigger loans, pay off the balance of the house, and use the rest of the money for other purposes, such as paying off debts.

Phil Crescenzo Jr, Vice President, Nation One Nation One Mortgage Corporation Southeast Corporation Southeast Division.

InterContinental Exchange, a real estate data provider, said the share of cash refund loans has been growing over time. Cash-intensive refinancing exceeds rate adjustment refinancing for three consecutive years until Mortgage rates fell last fall There are homeowners looking for lower borrowing costs.

Data shows that in September and October, nearly a quarter of borrowers had a balance of less than $125,000, refinancing at a higher rate.

Rising consumer debt may be related to re-activity

Consumers do have More paid offHousehold debt rose in the third quarter of 2024, with 3.5% of all loans increasing in some form of criminal behavior, according to the Federal Reserve in New York.

“Consumption debt is rising across the country because of inflation and everything else. People are funding things, maybe they carry personal loans or credit cards. Visit a mortgage, maybe they have to get $100,000 to pay off a bunch of loans and bills, etc. And that’s going to be some of the numbers you want to run. They just can’t find any other way,” Cressenzo said.