Will lenders let mortgage rates go lower?
“A big question now becomes what kind of capacity lenders have,” Kapfidze said. “If you don’t have enough people to process the volume you’re getting in, you’re not going to lower rates to attract more volume.”
Current low rates have already caused a boom in refinance activity. And demand among home-buyers remains elevated, in spite of the short supply of homes for sale. As a result, lenders don’t need to give Americans much more incentive to apply for new home loans.
Those in the refinance market would be smart to lock in rates now, Kapfidze said. “Most lenders will let you relock at the lower rate” when you close the loan, he said.
One exception to the mortgage rates trend could be home equity lines of credit, or HELOCs. These are adjustable-rate loans based on the prime rate. As such, they are set to see a drop in interest rates, since the prime rate does closely follow the Fed’s benchmark federal funds rate.
“HELOCs have been slowly falling in popularity, and over time the amount of HELOC debt has been gradually falling as people pay down their debts and fewer people take up the slack by borrowing them,” Lewis said. “This seems time for that trend to possibly reverse. The rates on HELOCs are going to be so tempting, especially for people who want to fix up their homes.”
*Source: Marketwatch blog