Refinancing has been quite popular over the past several years, as mortgage rates have been far below the national average in many places throughout the country. As a result, mortgage lenders were prepared to offer excellent rates and promotions for borrowers who wanted or needed to save money with a refinance loan.
Refinance mortgage rates are generally a percent or more below the average mortgage rate, and therefore these loans offered extremely attractive interest percentages along with many other benefits. As home sales increase across the country, mortgage rates are beginning to slowly rise back to prior year rates and there is a fear among lenders that this may slow refinance leads.
Whether refinance mortgage will rise significantly remains to be seen, but judging from past performance it appears that they probably will. Refinancing is an excellent way for borrowers to pull out cash based on the amount of equity that they have developed in their home while in repayment of their original mortgage loan. So, not only were refinance mortgage rates attractive but so was the prospect of paying off other costly bills including high interest credit card accounts.
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Refinance leads were not hard to generate for lenders with great rates, because the rates themselves did the talking to consumers. Once the rates increase, lenders will need to find new ways to generate leads and attract borrowers. This is a time consuming and often very costly situation for lenders who rely on a constant stream of refinance leads.
The hope is that as mortgage rates begin to climb, refinance rates will react slowly and there will still be many people interested in refinance loans. Even with slightly higher interest rates, refinance programs will continue to offer excellent advantages for borrowers looking to cut costs and lower their monthly payments.