Most Americans say it’s a good time to sell a home – here’s why you may consider a mortgage refinance instead

Home prices are surging at a record pace, causing consumers to agree now is not a good time to buy a home. (iStock)

Although mortgage interest rates remain near record lows, more Americans are now saying that while it's a good time to sell a home, it's not a good time to buy. However, as median home values surge across metro areas, it may be a great time to refinance.

The latest Home Purchase Sentiment Index from Fannie Mae saw some volatility in its "good time to buy" and "good time to sell" components. As of June, 64% of survey respondents said now is a bad time to buy a home, up from 56% the month before, while 77% said now is a good time to sell, up from 67% in May. That can largely be attributed to rising home prices, which are surging at a record-breaking pace.

Surging home prices are not good for homebuyers but can be great if you want to refinance your mortgage into a lower interest rate. The latest Primary Mortgage Market Survey from Freddie Mac showed interest rates remain below the 3% mark. If you're interested in refinancing, visit Credible to compare interest rates from multiple mortgage lenders at once to lower your monthly mortgage payment.


Home price increases hit record high

Home price growth in May dwarfed April’s already record-breaking 14.8% increase, and it rose 18% year-over-year in metros across the U.S., according to the latest housing data from the Mortgage Monitor report from Black Knight Data and Analytics. This marks the third consecutive month that high demand drove home price growth in the U.S. to hit an all-time high, tracking back to the mid-1990s.

"Frankly, home values are appreciating at rates we’ve simply never seen before, as low interest rates, ultra-scarce inventory and increasingly competitive homebuyers combine to create a truly unprecedented market," Black Knight President Ben Graboske said.

And more home price growth seems likely to come over the next year. Sales data from Black Knight’s Collateral Analytics group showed that for the first three weeks of June, home prices surged 25% year over year. The acceleration rate of home price growth was more than 2% in each of the past two months. In terms of monthly payments, that means it now costs an average of $191 more in principal and interest payments each month than it did at the beginning of this year to buy the same home in today’s market.

While these low housing affordability conditions don’t bode well for prospective buyers, it has opened up multiple opportunities for homeowners looking to refinance their mortgages. If you want to refinance your home loan, visit Credible to get pre-approved without affecting your credit score.


Homeowner equity hits record high, boosting opportunity for mortgage refinancing

As home prices surge, homeowner equity is also reaching new highs. At the end of the first quarter, 47.2 million homeowners with mortgages held a total of $8.1 trillion in tappable equity, or the amount they are able to borrow against their home while retaining at least a 20% equity stake, according to the Black Knight report. This represents an all-time high in the amount available to homeowners.

Homeowners gained $800 billion in tappable equity in just the first quarter of this year, bringing the average equity per homeowner to $153,000.

"Rising equity levels have created an environment where borrowers previously in FHA loans have been able to refi into GSE mortgages, reducing their interest rate while potentially dropping monthly mortgage insurance payments at the same time," the Black Knight report said.

If you are interested in refinancing your mortgage and want to pull cash out of your home to use for debt consolidation or a home renovation, visit Credible to see multiple lenders at once and compare your mortgage refinance options.


Housing demand to remain elevated

Rising home prices are hitting younger millennials that are first-time buyers the hardest since they don’t have the added benefit of extra equity in their current home. However, economists expect housing demand to remain strong.

"It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership," Doug Duncan, Fannie Mae senior vice president and chief economist, said. "Despite the pessimism in homebuying conditions, we expect demand for housing to persist at an elevated level through the rest of the year. Mortgage rates remain not too far from their historical lows, and consumers are expressing even greater confidence about their household income and job situation compared to this time last year, when the pandemic had shut down wide swaths of the economy."

If you're considering refinancing your mortgage but not sure if it's right for you, visit Credible to talk to a mortgage loan expert and get all of your questions answered.

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