Borrowers are in a hurry to refinance, as mortgage rates fall for another week

A property for sale in Monterey Park, California

Frederic J. Brown | AFP | Getty pictures

Mortgage rates fell for the second week in a row last week, and this helped to increase refinancing demand for the first time in a while. As a result, the total loan application volume rose 5.5% last week compared to the week before, according to the Mortgage Bankers Association̵[ads1]7;s seasonally adjusted index.

The average contract rate for 30-year fixed-rate mortgages with a corresponding loan balance ($ 548,250 or less) fell to 3.16% from 3.24%, with points unchanged at 0.34 (including the set-up fee) for 20% down payment loans. The interest rate is now down 14 basis points in the last two weeks, but still 18 basis points higher than the same week a year ago.

Refinancing demand, which is very sensitive to weekly interest rate movements, rose 7% last week from the week before. However, it was 28% lower from year to year. The refinancing share of the mortgage activity increased to 63.5% of the total applications from 61.9% the week before.

“Although overall activity remains close to the lowest levels in January 2020, homeowners traded on the decline in prices,” said Joel Kan, an MBA economist. “In addition, the average loan balance for a refinancing application was the highest in a month.”

Mortgage applications to buy a home increased by 3% for the week, but were 4% lower than the same week a year ago. The housing market is well into a slower season, and while demand is stronger than usual, home buyers are still facing a lean and expensive market. The short fall in prices may have brought some buyers back, but given how high the costs are today, it did not give them much more purchasing power.

Mortgage rates fell slightly to start this week. They are now at the best levels since the end of September.

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