Falling Mortgage Rates Spark More Refinances
DAILY REAL ESTATE NEWS
Mortgage rates dropped again last week, motivating more homeowners to take advantage of the savings. Total mortgage application volume, which includes refinancings and home purchases, rose 2.8 percent last week on a seasonally adjusted basis. The uptick was entirely driven by an increase in refinancing applications, the Mortgage Bankers Association reported Wednesday.
Refinance applications alone soared 9 percent week over week but remain 27 percent below a year ago, when mortgage rates were lower. “Over the last two weeks, refinance applications have increased 13 percent, and the average loan size increased to its largest since September 2016, reflecting the tendency for jumbo borrowers to be more sensitive to rates than those with smaller loan balances,” says MBA economist Joel Kan.
But with escalating home prices and weakening housing affordability, home buyers were not as quick last week to lock in lower interest rates. Applications for home purchases dropped 3 percent, but they remain nearly 8 percent higher than a year ago, the MBA reports. Also, the average 30-year fixed-rate mortgage decreased to 4.13 percent last week, from 4.14 percent the week prior.
Source: “Weekly Mortgage Applications to Purchase a Home Drop 3%, Even as Falling Rates Spark a Rush to Refinance,” CNBC (June 14, 2017)