Low Rates Spark Big Rush to Refinance
Applications to refinance mortgages surged to their highest level in more than a year as home owners rushed to take advantage of low rates. Thirty-year fixed-rate mortgages averaged 3.83 percent last week, the lowest level since April 2015, MBA reports.
The refinance boost fueled an 8.2 percent jump last week in total mortgage applications, according to the Mortgage Bankers Association. Refinance applications jumped 16 percent during the week ending Feb. 12. Mortgage applications for home purchases, on the other hand, dropped 4 percent during this same time. The volume for all refinances is now 50 percent higher than just four weeks ago.
"Treasury rates fell again last week, and mortgage rates fell to their lowest level in over a year, with rates on jumbo loans dropping to their lowest level since December 2012,'" says Michael Fratantoni, MBA’s chief economist. "As we have noted in recent weeks, borrowers with larger loans tend to be more sensitive to a drop in rates, because they stand to benefit more from refinancing."
Mortgage lenders reported a new record for the average loan size for refinances last week at $316,000, according to MBA.
While mortgage applications for home purchases fell last week, the gauge of future home-buying activity still remains strong for the year. Mortgage applications for home purchases remains 30 percent higher than the same week one year ago, MBA reports.
Source: “Refinancing Pushes Mortgage Applications 8.2% Higher,” CNBC (Feb. 17, 2016)
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