Concerns about the ISM manufacturing index, which fell short of expectation, brought Treasury yields lower on Monday. As a result, rates are even lower than where they were last week with the 30-year fixed rate mortgage down 8 basis points at 2.78% and the 15-year fixed mortgage down 7 basis points at 2.22%.
All this spending has finally caught up to Americans with household debt in Q2 increasing $313 billion for a grand total of nearly $15 trillion dollars. This represents the biggest increase in 14 years! Most of this can be attributed to mortgage originations as historically low rates sparked a purchase and refinance frenzy. What could improve the debt situation is the opportunity to refinance after 1) the recent return to the low rates last seen mid-February and 2) the reversal of the adverse refinance fee. Rates are back in the high 2s and, whereas before refinance rates were an eighth of a point higher than the same purchase scenario, now they’re about four basis points lower. As a result, 15.1 million mortgage holders could collectively save $4.5 billion each month by refinancing. Those looking to capitalize on the low-rate environment are already getting a move on with refinance rate locks up 23% for the week ending in July 21.