As mortgage rates fall, millions of additional homeowners can benefit from refinancing

Mortgage rates are in free fall and brutal, which means that millions of additional homeowners can now benefit from refinancing their loans.

The average rate on the popular fixed at 30 years has decreased compared to the recent peak of 4.23% May 21^st at 3.94% now, according to Mortgage News Daily.

The fear of the ongoing trade war with China, and now Mexico, is pushing investors to rush to the relative safety of the bond market, resulting in lower yields. Mortgage rates generally follow the 10-year US Treasury yield.

About 5.9 million borrowers could see their rates drop by at least 75 basis points by refinancing their mortgages. That represents an increase of 2 million last month, according to Black Knight, a mortgage software and badysis company.

This is the largest population of eligible applicants for almost three years and represents a total potential savings of $ 1.68 billion. Savings per borrower are approximately $ 271 per month.

If the rate only decreased by a quarter of a point, nearly 7 million borrowers could benefit from refinancing, with a collective savings of just over 1.8 billion. dollars.

Lower rates also benefit buyers, especially as house prices are cooling down. House prices in March rose 3.8% a year, the first time growth has fallen below its 25-year average of 3.9% since 2012, according to Black Knight.

Affordability is now the best for more than a year: the monthly payment on the average-priced home has decreased by 6% over the last six months (ie a 20% down payment).

"When we take into account income in the equation, we find that it takes 22% of the median income to buy a house at the average price.This is the lowest income-to-income ratio since over a year also, average long-term average of 25.1%, "wrote Ben Graboske, president of the data and badysis division of Black Knight.

Buyers have been confronted with a limited supply of cheap houses and an overheated market in general. Although price increases have dropped dramatically, today 's young shoppers are still highly indebted and often pay very high rents, making it increasingly difficult to buy new homebuyers. ;a house.

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