What usually happens if interest rates decrease?

When interest rates decrease, homeowners typically benefit by refinancing their mortgages. This is because lower interest rates make it more affordable to borrow money. Refinancing allows homeowners to replace their existing mortgage with a new one at a reduced interest rate, leading to lower monthly payments and potentially saving on overall interest costs over the life of the loan. This can also enable homeowners to access equity in their homes more advantageously or shorten the term of their loan, thereby allowing them to pay off the mortgage more quickly.

In contrast to the other options, the decrease in interest rates generally does not lead to an increase in homeowners who do not refinance, an uptick in equity payments, or an increase in PMI (Private Mortgage Insurance) costs, which are all situations that would typically arise under different market conditions or economic pressures.