Mortgage Rates Hit One-year Low As Refinancing Surges

Mortgage rates are falling and homeowners are taking advantage of it, as shown by the surge in refinancing numbers.

According to CNBC, the Mortgage Bankers Association's seasonally adjusted index showed an increase of 35% in applications for home loan refinancing.

This was higher compared to the previous week, which may have indicated that it took a bit of time for homeowners to realize that mortgage rates have already dropped significantly. The increase is actually 118% higher when compared to the figures in the same week about a year ago.

The Associated Press reported last week that the average rate for a 30-year mortgage was as its lowest in more than a year.

The increase in applications was apparent even though a 30-year fixed rate mortgage with conforming balances of $766,550 or less only saw its average contract interest rate falling slightly from 6.55% to 6.54%. The loans with 20% down payment saw points decreasing from 0.58 to 0.57.

Although a look at the rates from the past week would show that rates dropped only one basis point, the past four weeks' numbers denote a decrease in 33 basis points. When compared to the same week from a year ago, it would show a reduction of 62 basis points.

MBA economist, Joel Kan, said that "the refinance index also saw its strongest week since May 2022, driven by gains in conventional, FHA, and VA applications."

While there was a surge in refinancing home loans, the same was not true for mortgage applications to purchase a home. It indicated a 3% increase, which was 8% lower compared to the same week from the previous year.

According to agents, some buyers felt that mortgage rates my fall much lower, causing them to wait further before deciding on a large purchase. The high interest rates that confront homebuyers today, still takes a toll.