Where is the refi boom?
Below is an interesting write up from a Bank of America economist.
The refinancing wave has been tepid given that the average rate on a 30-year
conforming mortgage has fallen to a record low of 4.42%. At this rate,
the large majority of homeowners have an incentive to refinance. It is therefore
disappointing that the pre-released tables from the 2009 American Housing
Survey show that, of the 68% of homeowners with mortgages; nearly half have
mortgages greater than 6%.
The relatively low rate of refinancing is seemingly a function of the difficult and
timely process that requires a great deal of paperwork and upfront costs for the
borrowers. Negative equity borrowers will also face roadblocks to refinancing.
This is unfortunate, since a refinancing boom would provide a stimulus to the
stumbling economy. Assuming the median price of $171,400 over the first half of
the year and a 20% downpayment, the median monthly payment would drop from
$822 with a 6% mortgage rate to $695 with a 4.5% mortgage rate. This translates
to a savings of $1,528 a year, or 2.5% of median US family income.
Have a great day!
PS: While my business is good and growing steadily, it is important for you to know that I am always looking forward to helping those you refer to me: your family, friends, neighbors, and coworkers!
Sean Wheelan
Personal Mortgage Consultant
The Mortgage Group, Ltd
401-965-9384 Cell
SWheelan@TMGLtd.biz Email
www.TheFriendlyNeighborhoodMortgageGuy.com Web Site
508-276-0171 Fax
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