The lowest interest rates since 1998 spell silver for home buyers and refinancers, and gold for mortgage lenders. This is a phenomenal increase over the same period last year. She expects to see this refinancing trend continue through spring and summer. However, if the economy does not rebound and people begin to fret about their jobs, Richards expects the good times for mortgage lenders could end by fall. For borrowers, it means lower monthly payments and shorter terms.
Baby boomers are now at their peak career earnings.
They're choosing shorter terms so that when retirement comes, they'll be free of mortgage payments and free to spend their retirement income on things more exciting than a roof over their heads. Richards sees the refinancing boom as an adjunct to a less dramatic, but still significant, increase in home purchases. But she and McNeely both think that once homeowners are satisfied with their mortgages, new home buying could quickly level off. Homeowners who have refinanced their mortgages tend to have more mortgage debt than those who have not. While lower rates spur the retail side of mortgages, lower mortgage payments for consumers mean lower interest income for investors.