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The Federal Home Loan Mortgage Corporation popularly known as Freddie Mac has warned that the recent spike in yields has cut the population of eligible refinance candidates by a half. According to the corporation, at the end of November, there are about 2 million borrowers still out there who could cumulatively save around a billion dollar by opting to refinance their mortgage but that is less than half of $2.1 billion eligible a month ago. The reason behind is the relentless move of interest rates higher.
The 30-year fixed rate refinancing rate is currently at 4.625 percent, more than a percent higher than that was a few months back. Freddie warns that if rates continue to move higher, the mortgage activity would remain significantly subdued in 2017. According to latest figures from Mortgage Bankers Association’s Applications Survey for the week ending Dec. 9, Mortgage applications decreased 4 percent from one week earlier, which follows a 7 percent decline in applications last week and a 9.4 percent decline the week before that. The Refinance Index fell 4 percent from the previous week, as the seasonally adjusted Purchase Index decreased 3 percent from one week earlier.
The mortgage rates are likely to continue their journey higher as the Federal Reserve indicated this week, a faster pace of hike in 2017.
