Final answer:
Streamlined Refinances can indeed come with either fixed or variable rates, and a 3% drop in inflation would likely lead to decreased interest rates for an adjustable-rate mortgage, reducing monthly payments for the homeowner.
Step-by-step explanation:
True, Streamlined Refinances are available at both fixed and variable rates. Streamlined refinancing is a mortgage-financing option offered to help lower interest rates, change mortgage types, or alter other terms of a loan without a full credit underwriting process.
Adjustable-rate mortgages (ARMs) are directly influenced by changes in market interest rates. If inflation unexpectedly falls by 3%, market interest rates are likely to decrease as well. For a homeowner with an adjustable-rate mortgage, this would typically mean that their mortgage interest rates would decrease, consequently reducing their monthly payments, assuming the rate adjustment period in their ARM coincides with this change.
The flexibility of ARMs can be advantageous in a declining interest rate environment. However, homeowners with a fixed-rate mortgage would not be affected by these changes in inflation, as their interest rates remain constant throughout the life of their mortgage loan. Lastly, changes in federal government bank regulations that make it cheaper and easier for banks to make home loans could lead to more competitive lending options for borrowers.