A sign is posted in front of a home for sale on August 7, 2024 in San Rafael, California.
Justin Sullivan | Getty Images
Mortgage rates have fallen steadily to two-year lows, leaving current homeowners eager to take advantage of potential savings.
Home loan refinancing applications surged 20% last week from the previous week, according to the Mortgage Bankers Association’s Seasonally Adjusted Index. Demand is a staggering 175% higher than the same week a year ago.
That’s because the average contract interest rate for a 30-year fixed-rate mortgage with qualifying loan balance ($766,550 or less) fell from 6.15% to 6.13%, and the score for a 20-year loan increased from 0.56 (including the origination fee) to 0.57. % down payment. The rate was 128 basis points higher than the same week a year ago, or 7.41%.
“The 30-year fixed rate fell for the eighth consecutive week to 6.13%, while the FHA rate fell to 5.99%, surpassing the psychologically important 6% level,” Joel Kan, MBA vice president and deputy chief economist, said in a news release. “We saw a sharp increase in week-over-week increases in conventional and government refinancing applications as interest rates fell. “
The proportion of refinancing applications rose to 55.7%. While the increase compared with a year ago is substantial and now accounts for the majority of total mortgage demand, the level of refinancing activity remains modest compared with previous refinancing waves, Cann said.
This is partly due to a seasonal slowdown in home buying activity. Mortgage applications for home purchases rose just 1% this week, compared with a 2% increase from the same week a year ago. Buyers still face high housing prices and a limited supply of homes for sale.
“The average loan size was higher for both purchase and refinance applications, pushing the overall average loan size to the highest in survey history at $413,100,” Kan added.
Mortgage rates started the week without much change, likely awaiting more pressing economic data later in the week and early October.
