Your Mortgage: The Surprising Way People Bet on Lower Rates

Mortgage rates have been unpredictable lately, falling when most expected them to rise. Yet interestingly, people looking at buying homes or refinancing their mortgage loans haven't acted the way you'd expect given these lower rates.

In the following video, Dan Caplinger, the Motley Fool's director of investment planning, looks at how refinancing activity recently spiked only after mortgage rates started rising from low levels. Dan notes that when rates rose sharply last year, Wells Fargo (NYSE: WFC  ) , Bank of America (NYSE: BAC  ) , and other lenders saw refinancing activity fall sharply. Yet even as rates fell early in 2014, mortgage activity didn't pick up substantially. Only once rates started going up did we start seeing a boost in activity, with an 11% jump in refinancings last week. Dan concludes that people want the lowest rates they can get, but when those rates start to rise, they stop hoping for even better results and instead take what they can get. With rates potentially rising further, locking in now might be a smart move for those not willing to gamble on their mortgages.

These stocks beat the big banks ...
Banks make great investments, and over time, their dividends can make you significantly richer. But guess what? The big banks are laggards when it comes to paying dividends. So instead of waiting for a cash windfall that may never come, check out these stocks that are paying big dividends to their investors right now. Click here for the exclusive free report.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 18, 2014, at 12:34 PM, lmclane22 wrote:

    I had to comment on this being in the mortgage origination side of the business. Applications spike last week because the week before interest rates were down and we were able to lock rates and begin processing files at the lower rates. By the time this week rolled, even though rates have increased, the applications from the week were submitted to the lenders. This gives the illusion of grasping for whatever they can get but it is not the truth. This week and the next few, barring something from the Fed announcement, you will see applications drop substantially.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2994673, ~/Articles/ArticleHandler.aspx, 9/5/2015 8:41:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

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 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.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:01 PM
BAC $15.65 Down -0.29 -1.82%
Bank of America CAPS Rating: ****
WFC $51.29 Down -1.14 -2.17%
Wells Fargo CAPS Rating: *****