So far, 2025 forms are a little better when it comes to priority rates.
While the 30-year-old fasting is only a little below the year before, it seems to be in a better direction compared to last year.
It is currently around 6.75%, which is about an eighth below the average of 6.875%seen in early March 2024.
But unlike that time, the mortgage rates can sink further down in the spring instead of rising as they did in April and May.
And it can be a blessing for existing homeowners who want to refinance an existing home loan.
Rate and Term Refis continue to win when the mortgage rates are improved
There are three main types of mortgage loan loans that are self-explanatory.
And mortgages that are divided into an interest rate and term refinancing and a refinancing payment.
As the mortgage rates increased and eventually hit 8% at the end of 2023, no one applied for an interest rate and term refinancing.
Why? Because you would only really do it if you could achieve a lower interest rate in the process.
This meant that the only real game in the city, except for some purchase lending, were payments where existing homeowners either consolidated debt or exploited equity to pay for other expenses.
But now that the mortgage rates seem to fall, and well below the scary 8% levels seen for approx. 18 months ago, assessments and semi -detaching have made a small comeback.
In fact, they have been the one bright spot recently in the priority world, with Cash Out Refis also Eeking some minor gains.
Long history short, the high priority rates seen in the last few years have created an opportunity now that they are slightly lower.
Borrowers who took priority loans with rates in the high 7s or even 8s can now shop for something more tasty, like a 6.5% rate.
For example, a hypothetical borrower of $ 400,000 can borrow amounts lower their principal and interest payment by approx. $ 300 per Month.
Rate and Term Refi-volume up nearly 120% year-over-year
The latest report on market advantage from Optimal Blue revealed that Rate/Term Refinance Lock Volume increased almost 40% (39.2%) in February from a month earlier.
And the change of 3 months was an even higher increase of 48.3%, while the 12-month change was an increasing increase of 118.5%.
When you look at the map above, you can of course see that Rate and Term Refis (dark blue) still accounts for a spread of the total loan production.
So while enjoying some good percentage winnings, they are not as good as they look. But you have to start somewhere and the recent increase is a promising start to 2025.
As was referred to earlier, if mortgage rates continue to be lower when the months pass, the volume could really explode.
As a reference, the 30-year-old was fixed around the current levels last year before turning up to approx. 7.50% in April and May.
It eventually lightened in the summer before it fell to about 6% on the fat pivot, which led to a large uptick in refinancing activity.
But it was short-lived because of a hot job report, followed by a Trump presidential victory, both of whom driven prices higher.
Assuming that cool financial data continues to enter and Trump’s tariffs do not create too many problems (no guarantee there), the rates can revise these low 2024 and even go lower.
If that happens, there is a lot of suspended refinancing demand waiting for the sidelines, possibly some who missed the window last September before the rates shot up again in October.
Under-6% Mortgages could add millions of refinancing candidates
When the mortgage rates hit 6,125% in September, the population jumped into the money for the money by approx. 1.3 million per Report from ICE at the time.
Had bets continued to fall by saying 5.75%, another two million Refi candidates would have realized.
And if the rates fell to 5.5%, which many refer to as a magical number for home purchases, another 1.2 million more.
In other words, it may be possible to unlock three million or more refinancing if/when the 30-year-old fasting falls back to the mid-5s, similar to a real option this year.
Finally, it could get refinances to take into account a decent proportion of the total locking amount again, rather than simply seeing large percentage gains from rock-bottom levels.
At the same time, if low priority rates are driven by a recession, you may have a situation where home buying loans fall, despite improved affordable prices.
In short, lower demand due to fewer eligible home buyers means less home sales.
Also, it could push up the refinancing share on the market, which stood at only 22% in February.
It was as high as 32% last September, so if the mortgage rates fall below these levels, it would not be unreasonable to see Refis seize a 40% share again.
And it could make the 2025 year of interest rates and the expression refinancing after a tough couple of years.
Before creating this site, I worked as a banking director of a wholesale loan in Los Angeles. My practical experience in the early 2000s inspired me to start writing about mortgage loans 19 years ago to help potential (and existing) home buyers better navigate the home loan process. Follow me on x for hot take.