Current homeowners were slow to realize that mortgage rates had dropped significantly, but once they did, there was a surge in applications to refinance home loans. The Mortgage Bankers Association reported a 35% increase in refinance applications compared to the previous week and a 118% increase compared to the same week the previous year. Despite only a slight decrease in the average contract interest rate for 30-year fixed-rate mortgages, there was a significant decrease in rates over the past four weeks.
While refinance applications saw a substantial increase, applications for mortgages to purchase homes only rose by 3% for the week and were still lower compared to the same week the previous year. Homebuyers are facing challenges beyond high interest rates, including high home prices and low supply. Some buyers are also waiting to see if mortgage rates will drop even further before making a purchase.
The refinance share of mortgage activity increased to 48.6% of total applications, up from just 29% one year ago. Mortgage rates remained flat at the start of the week, but with the release of the consumer price index, there could be fluctuations. The uncertainty regarding the impact of the CPI on mortgage rates is highlighted by experts, making it difficult to predict whether rates will increase or decrease in the near future.
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