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Will the rest of 2024 be a good time to refinance a home in the state of Washington? Can homeowners benefit from the decrease in mortgage rates at the end of 2023?
Those are two of the frequently asked questions we’ll be addressing in this mortgage market update for 2024. Let’s start with the short version before we dig into the details:
Many homeowners in Washington who purchased a home during 2023 have higher mortgage rates than today’s averages. So they could benefit from mortgage refinancing in WA State into a lower rate, especially if they stay put for a while. But those homeowners with rates below 6% have less incentive to refinance this year.
Mortgage rates have declined quite a bit over the past three months. After hitting a 20-year high of 7.8% in October of last year, the average rate for a 30-year fixed mortgage loan dropped by more than 1%.
When this report was published, during the first week of February 2024, mortgage rates were hovering around 6.6%. That’s according to the nationwide weekly survey conducted by Freddie Mac.
When mortgage rates drop significantly in a relatively short period, we see increased home refinancing activity in Washington. That’s because homeowners with a higher interest rate on their current loan can reduce their monthly payments by refinancing to a lower rate.
We’re starting to see some early signs of this trend already. According to a January 2024 report from the Mortgage Bankers Association:
“The Refinance Index increased 2 percent from the previous week and was 3 percent higher than the same week one year ago.”
Which brings us back to the question we started with. Can homeowners benefit from mortgage refinancing in WA State in 2024? This will largely depend on (1) your current mortgage rate and (2) how long you plan to stay in the home.
If you purchased a home in the state of Washington during the second half of 2023, your current mortgage rate might be higher than today’s averages. So, you can benefit by refinancing in 2024, reducing your monthly payments in the process.
During the fall of last year, the average rate for a 30-year mortgage loan ranged from around 7% in September up to nearly 8% by late October. But they’ve declined considerably since then, putting a lot of Washington homeowners in an excellent position to refinance.
The value of mortgage refinancing in 2024 will also depend on your personal financial goals. After all, homeowners in Washington refinance for different reasons. Most people do it to snatch a lower rate and reduce the size of their monthly payments. But there are several other benefits of mortgage refinancing as well.
Recent purchases: Those who bought a home in Washington during the latter part of 2023 could see significant savings by refinancing down to today’s rates. Even a small drop in your interest rate could save thousands over the life of the loan, especially for larger loan amounts.
Adjustable-rate mortgages: If your ARM loan is due to adjust soon, refinancing into a fixed-rate mortgage could provide long-term stability and potentially lower payments. This is a common strategy among homeowners in Washington.
Tapping equity: A cash-out refinance allows you to access a portion of your home’s equity as cash. This can be useful for consolidating debt, making home improvements, or covering other expenses.
Last month, government-sponsored mortgage buyer Freddie Mac researchers published a housing market forecast that included long-term mortgage rate predictions. They predicted an increase in home purchase and refinance volumes through 2024 and into 2025.
They also covered some of the points above regarding which homeowners in Washington might benefit from refinancing in 2024.
According to the Freddie Mac report:
“The drop in mortgage rates will push refinance originations up, as buyers who obtained higher interest rates in 2023 will likely refinance into lower rates. However, rates remaining around the 6% range will not provide enough refinance incentives to millions of homeowners who currently have rates below 6%. And therefore, we expect refinance volume to grow only modestly this year.”
As mentioned above, we probably won’t see a massive surge in mortgage refinance activity this year. Thirty-year mortgage rates averaged below 5% for all of 2020 and 2021. So, the current homeowners who purchased back then have little reason to refinance in 2024—unless they’re doing it to tap into their equity.
But for those Washington homeowners who purchased more recently and have an existing mortgage rate in the 7% range, a 2024 refinance might be worth pursuing. This is especially true if you have strong credit and qualify for a lower rate.
Additionally, homeowners in Washington who want to pull cash out of their home equity could benefit from a cash-out refinance in 2024.
According to Zillow, the median home price in the state of Washington rose from around $378,000 to $562,000 in the past five years alone. So, anyone who owned a home in
During that time, Washington probably sat on a lot more equity.
In closing, many homeowners may benefit from mortgage refinancing in WA State if they can snag a rate lower than they currently pay. Doing so may save a significant amount of money over the life of your home loan that would otherwise be paid in interest.
Have questions? Are you wondering how to refinance your home mortgage? We can review your current mortgage situation to determine if you might benefit from refinancing in 2024. Please contact our knowledgeable staff with any financing questions you have or to receive a quote.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.