Greg Rutolo | Loan Factory

There are multiple reasons why a refinance may be a great option. The answer to the questions depends on your current financial scenario

Mortgage rates dipped to all time lows during the 2021-2023 post pandemic era. Low treasury yields and an endless flow of cheap money helped homeowners of that era achieve the lowest mortgage and borrowing rates in US history.

In the years since, the aftermath of low interest rates and investors looking for relatively safe, conservative investments helped push home values up across the nation as well. The low mortgage rates of the early twenties, ushered in an unprecedented era of low housing inventory.

Many homeowners with low rates and comfortable mortgage payments chose not to sell their homes. Once mortgage rates went up this trend became even more dramatic. Potential homeowners didn’t want to take on a new mortgage at a 5.5%, 6.5% or even up to 7.5% – when they were already sitting on a mortgage rate in the low three’s or high two’s.

At the same time, new home construction numbers were near a historic low. The new home construction numbers never recovered from the 2008-2009 financial collapse. This lack of recovery lead to the United States being more than a million homes short by typical new home construction standards.

Both low mortgage rates and low inventory, created a sellers market rarely seen in the United States. Demand for homes was as strong as ever, and with a lack of suitable homes on the market prices shot up.

As a whole across the United States, from mid 2020 through 2025 home prices shot up almost unimpeded. Now homeowners are sitting on record equity in the property.

During the same time period everyday inflation has been on the rise. Everything the the cost of gas, grocieries, entertainment and housing has seen rapid increase. In most cases pay raises have not keep pace. The cost of living day to day is significantly higher than it was even five years ago.

This increase in cost of living has led to a rapid expansion of credit card debt. The United States is sitting on record credit card debt. Credit card interest rates, under the best scenarios are pushing 20% interest rate.

So at the same time that the US is sitting on record home equity, we are also sitting on record credit card and personal debt. Is there a way out?

In part two of this series, we will explore how the conversion of home equity increases and the explosion in personal debt come together to help answer the question Is Now A Good TIme to Refinance?