Estate agents Rosa Arrigo (center) and Eliza Rosen (right) attend an open house in West Hempstead, NY, April 18, 2021.
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Last week, homeowners saw the opportunity and seized it. The sudden and unexpected drop in mortgage rates has led to massive borrowers turning to their lenders in the hope of saving on monthly payments.
Home loan refinancing applications jumped 20% last week from the previous week, according to the Mortgage Bankers Association’s weekly index, which was adjusted for seasonal fluctuations, including the 4th of July holiday.
Refinancing demand is very sensitive to weekly and even daily rate changes. While the drop was not all that big, it was enough given that rates are expected to start rising with a stronger economy.
The average contractual interest rate for 30-year fixed rate mortgages and associated loan balances ($ 548,250 or less) decreased to 3.09% from 3.15%, while the interest rate decreased to 0.37 from 0 .38 (including issuing fees) for loans with a 20% decrease. payment.
“Treasury yields have declined over the past month as investors remain concerned about the Covid-19 option and slowing economic growth,” said Joel Kahn, MBA’s deputy vice president of economic and industry forecasting. “As a result, mortgage rates fell for the second week in a row, with the 30-year fixed rate hitting 3.09%, the lowest level since February 2021.”
Kahn noted that there may have been a delayed flow of applications from the previous week, when rates also fell, but there was little response for refinancing applications.
However, refinancing demand was still 29% lower than in the same week last year. A year ago, rates were slightly higher at this time, but lending was very limited. Lenders are now starting to relax a little given the slower demand for home loans, and this could give some borrowers opportunities for savings that they could not get a year ago.
Home mortgage applications rose 8% over the week, but were 29% lower than a year ago. The average loan size for buy orders fell to its lowest level since January.
“We continue to see the ebb and flow as demand for housing remains strong, but stocks for sale remain low. However, lower rates may help some homebuyers complete their purchases, especially first-time homebuyers, ”Kahn said.
The offer of houses for sale is finally starts to growand it could also bring some buyers back to the market after they were crowded out by fierce competition last year.
However, this week, mortgage rates began to rise again after consumer price index, one of the main indicators of inflation, has grown at the fastest pace in almost 30 years.