When interest rates drop noticeably, astute homeowners react quickly, as they’ve been doing in the weeks following Britain’s vote last month to leave the European Union. The decision rattled the markets, mortgage rates fell to near-record lows, and refinancing applications took off.
In the week after the vote, Zillow reported a 132 percent surge in refinance requests through its online mortgage marketplace, while the Mortgage Bankers Association’s weekly measure of application volume showed the highest level of refinance applications since January of 2015.
Refinancing can be a way to cut monthly payments, if rates fall considerably below a homeowner’s original mortgage rate. It can also help in other ways, enabling homeowners to pay down debt more quickly on a shorter-term loan or tap into equity for home improvements and other needs. And available equity has grown in recent years, thanks to rising home values: Some 38 million homeowners now have at least 20 percent equity in their homes, worth an average of $116,000, according to Black Knight Financial Services. That’s up from about 31 million just three years ago.