In other words, refinancing into a much lower mortgage rate isn't just good for your budget. It's also good for the country.
Forecast: Low rates are here to stay
Rates for America's most popular home loan — the 30-year fixed-rate mortgage — are expected to average just 3.3% throughout 2020, says a forecast from mortgage giant Freddie Mac. That's way down from last year's average rate of 3.9%.
The benchmark mortgage rate is likely to sink even further in 2021, to an average 3.1%, Freddie Mac says.
That means rates will keep hitting fresh all-time lows. Thirty-year mortgage rates last month dropped to an average 3.29%, the lowest so far in Freddie Mac's nearly 50-year old weekly survey of mortgage rates.
But even though the experts see lower mortgage rates off in the future, homeowners should never sit around and wait for the perfect refinance rate — because no one really knows where mortgage rates will go.
"Don’t try to time the market!" warns Viral Shah, co-founder of the online mortgage lender Better.com. "If the numbers make sense to help you achieve your goals, that’s when it makes most sense to refinance."
Shah says if you see a mortgage offer that would let you refinance and chop your monthly payment or your long-term interest costs, be sure to lock that rate.
Use our mortgage calculator to see how a refinance could save you money:
How low rates will help nurse the economy back to health
Freddie Mac's forecast looks for U.S. homeowners to take out $1.26 trillion in refinance loans this year, representing a huge jump from last year's estimated $846 billion in refinance originations.
The refinance wave can help revive the economy once the coronavirus calamity passes, says a new report from LendingTree.
"When homeowners save money on their monthly payments, they’re able to redirect the money they save to other areas of their budget, such as their savings or to buy consumer goods. This adds to the economic growth for the entire country," writes LendingTree chief economist Tendayi Kapfidze.
According to Kapfidze's research, homeowners who refinance can save $60 a month for every $100,000 they borrow — if they're able to lower their mortgage rate by around one percentage point.
And that's not so difficult, given that rates right now are about a full point below where they were just one year ago.
Americans paid about $411 billion on their mortgages during 2019, LendingTree estimates. Refinancing at today's historically low rates could slash the annual total to $350 billion — meaning homeowners could cut their housing costs by a combined $61 billion a year.
Yes, that's a lot of money. If you own a home, consider whether it's time to refinance and grab your share.
Take a look at today's best mortgage rates where you are: