Low Rates Prompt Rush to Refinance
The number of home owners refinancing their mortgages zoomed to its highest level in three years last week as mortgage rates continue to fall. The Mortgage Bankers Association reports that total mortgage application volume — including for refinancings and home purchases — climbed 7.2 percent last week compared to the previous week on a seasonally adjusted basis.
Refinance applications, which rose 11 percent last week and are up nearly 65 percent from a year ago, fueled the overall jump, MBA reported Wednesday. "Mortgage rates dropped again last week to their lowest level in more than three years, as investors continued to seek safety in U.S. assets given the global turbulence following the 'Brexit' vote," says Mike Fratantoni, MBA's chief economist.
The 30-year fixed-rate mortgage averaged 3.6 percent last week, the lowest average since May 2013, MBA reports. Rates for jumbo loans — those greater than $417,000 — plummeted to 3.61 percent.
"For the second week in a row, jumbo rates exceeded conforming rates on 30-year fixed-rate loans, reversing the pattern that has been in place for much of the past three years," Fratantoni says. "This could be a sign that banks are being somewhat more cautious in putting long-term, fixed-rate assets on their balance sheets at these rate levels."
Meanwhile, applications for home purchases barely budged week-to-week but are 5 percent lower compared to the same week a year ago. "Although some local markets remain on solid economic footing, more agents are citing buyers' concerns with the broader economy and volatile financial markets as holding activity back," according to a report released by Credit Suisse. "Moreover, high-end market trends continue to lag those on the low end in many metros."
Source: “Mortgage Refinances Surge 11% as Rates Drop to Three-Year Low,” CNBC (July 13, 2016)
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