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Why Lower Mortgage Rates Won't Make Refinancing Popular Again

In a surprising move, mortgage rates have actually fallen in 2014. That has some wondering if the decline in refinancing activity that Wells Fargo (NYSE: WFC  ) , JPMorgan Chase (NYSE: JPM  ) , and other banks have seen will reverse itself, but there are good reasons why refinancing won't get popular again.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains why mortgage refinancing probably won't pick back up in the near future. Dan acknowledges that higher rates crushed refinancing activity and that lower rates generally encourage people to refinance their mortgages. But Dan notes that most people who could refinance already did so at much lower rates than are currently available. With low rates only helping those who bought their homes very recently, Dan concludes that Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , and other mortgage lenders will have to rely on new-home financing for the time being.

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  • Report this Comment On February 02, 2014, at 3:17 PM, TJR wrote:

    Yes most people hate their banks, but people who have money only use their investment company for banking ie deposit/withdrawal. The problem with most non brick and mortar intuitions is easy access they need the regular bankings ATM access.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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