New homes are listed for sale in Woodland Village, built by housing developer Lifestyle Homes, in Cold Springs, Nevada.
Andre Tambunan | AFP | Getty Images
It apparently took a few weeks for existing homeowners to realize that mortgage rates had dropped dramatically. And when they did, they moved.
Mortgage refinance applications jumped 35% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. They’re up a staggering 118% from the same week a year ago.
Although the average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) fell very slightly, from 6.55% to 6.54%, with points falling to 0.57 from 0.58 (including origination fees) for loans with a 20% down payment.
Although interest rates fell by just one basis point last week, they have fallen by 33 basis points over the past four weeks. They are also down 62 basis points from the same week a year ago.
“The refinance index also had its strongest week since May 2022, driven by gains in conventional, Federal Housing Administration and Department of Veterans Affairs loan applications,” Joel Kahn, a business economist, said in a statement.
Mortgage applications for a home rose just 3% for the week, still down 8% from the same week a year ago. Today’s homebuyers are dealing with more than just high interest rates. They’re still facing high home prices and low supply. There’s also a sense among some buyers, according to agents, that mortgage rates could fall further, so they’re waiting before making such a big purchase.
Refinances’ share of mortgage activity rose to 48.6% of total applications, up from 41.7% the previous week. A year ago, refinances accounted for just 29% of total applications.
Mortgage rates started this week basically flat, but that could change with the government's monthly inflation report, the Consumer Price Index.
“There’s no way to know in advance whether the data will be helpful or harmful — just that the CPI is responsible for some of the biggest ups and downs over the past few years,” wrote Matthew Graham, chief operating officer of Mortgage News Daily.
