As homeowners take advantage of low interest rates, the demand for mortgage refinancing increases

A sign advertising home loan rates for purchase or refinancing at Bank of America in New York.

Scott Milne | CNBC

After peaking at the end of the year, mortgage rates fell sharply last week. This has created demand from current homeowners hoping to save on their monthly payments, but it has not excited potential home buyers.

As a result, total mortgage application volume rose only 1.2% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with balances ($647,200 or less) fell to 6.42% from 6.58% last week. fee. A year ago, it was 3.52%.

“Mortgage rates fell last week as markets reacted to data showing a weaker economy and slower wage growth. All loan types in the survey saw declines in rates,” said MBA economist Joel Kahn.

The fall in rates spurred a 5% increase in applications for home loan refinancing. However, that was 86% lower than the same week a year ago. According to mortgage technology and analytics firm Black Knight, 270,000 borrowers at current rates could benefit from refinancing, even if rates fall below 7%. At half the rate of a year ago, about 7 million borrowers could benefit.

Mortgage applications to buy a home fell 1% for the week and were 44% lower than the same week a year ago. This is the lowest level since 2014. Not only are buyers today struggling with high interest rates but supply is falling. They also watch prices go down and wait to see how much they go down.

See also  Kodanji Brown Jackson Confirmation Live Announcements: Question starts Tuesday

Mortgage rates have moved in a narrow range so far this week. The market is eyeing the next release of the monthly Consumer Price Index due on Thursday. If inflation continues to cool, mortgage rates could drop further.

Leave a Reply

Your email address will not be published.