Mortgage rates are at a six-month low and refinancing has skyrocketed

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A real estate agent stands in the doorway as Jovani and Nicole Quiros from Brooklyn, New York attend an open house in West Hempstead, New York.

Rachel Brightman | Newsday LLC | Newsday | Getty Images

The popular 30-year fixed rate on mortgages fell to its lowest level since February last week, while the 15-year fixed rate set an all-time low. This sent borrowers to their lenders who wanted to save on their monthly payments.

According to the Mortgage Bankers Association’s seasonally adjusted index, home loan refinancing applications jumped 9% last week from the previous week. They were still 10% lower than a year ago. The share of refinancing mortgage activities increased to 67.2% of the total number of applications from 64.9% in the previous week.

The average contractual interest rate for 30-year fixed rate mortgages and associated loan balances ($ 548,250 or less) decreased to 3.01% from 3.11%, while the interest rate decreased to 0.34 from 0 , 43 (including processing fees) for loans with a reduction of 20%. payment. The average rate at 15-year fixed rates set a new low of 2.36%.

“The yield on 10-year Treasuries fell last week as investors became worried about the increase in Covid-19 cases and the risks of a slowdown in the current economic recovery,” said Joel Kahn, MBA’s deputy vice president for economist and industry forecasting.

The number of applications for mortgages to buy a home fell by 2% over the week and was 18% lower than a year ago. It was the second week of the decline and the lowest level since May 2020. Over the past three months, the number of buy orders has been lower on an annualized basis.

“Potential buyers continue to be deterred by extremely high house prices and increased competition,” Kahn said.

Mortgage rates continued to decline earlier this week, but now all eyes and ears are on the Federal Reserve’s announcement due Wednesday at 2:00 pm ET. Mortgage rates do not match the federal funds rate, but they are loosely tied to the 10-year US Treasury yield and are driven by the demand for mortgage-backed bonds. The Fed bought these bonds, but said it would begin to cut back on its purchases. If the Fed’s comments suggest that purchases will continue longer than expected, then mortgage rates could fall further.

“On the other hand, if the Fed says that the recent spike in Covid cases was on their radars and that there was no revision of the narrowing targets by the end of 2021, rates could definitely go up,” wrote Matthew Graham, chief operating officer. Mortgage News Daily employee.

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