Mortgage Refinance Boom Underway After Rates Fall

People who had to obtain mortgages in the past few years while rates were at multi-decade highs have started a mini-refinancing boom as rates have eased.

Applications to refinance mortgages were up 20% from the previous week to their highest level since July 2022.

Applications for new mortgages increased 11%, according to data from the Mortgage Bankers Association.

"The 30-year fixed rate decreased for the eighth straight week to 6.13 percent, while the FHA rate decreased to 5.99 percent, breaking the psychologically important 6 percent level," Joel Kan, MBA's Vice President and Deputy Chief Economist. "As a result of lower rates, week-over-week gains for both conventional and government refinance applications increased sharply."

Average loan sizes jumped to the highest in the survey's history at $413,100.

The refinance share of mortgage activity increased to 55.7 percent of total applications from 51.2 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.13 percent from 6.15 percent, with points increasing to 0.57 from 0.56 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 6.47 percent from 6.41 percent, with points decreasing to 0.50 from 0.55 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 5.99 percent from 6.12 percent, with points decreasing to 0.79 from 0.81 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The U.S. Federal Reserve cut the overnight lending rate by a half-point last week but that doesn't directly impact mortgage rates, which are more closely tied to another lending rate.