Refinancing demand jumps 105% annually, as mortgage rates hit record high
In this Friday, September 21, 2012, photo, a house is for sale in Oklahoma City. Average US rates on fixed-rate mortgages have fallen to new record lows again. The drop suggests that the Federal Reserve’s stimulus efforts could impact mortgage rates. Mortgage buyer Freddie Mac said Thursday, September 27, 2012, that the 30-year loan rate had fallen to 3.40%. That’s down from last week’s 3.49% rate, which was the lowest since long-term mortgages started in the 1950s. (AP Photo / Sue Ogrocki)
Mortgage rates set a new record last week – the 15th this year and the second record in as many weeks.
The decline has not resulted in a significant change in weekly mortgage applications, however, but demand is significantly stronger than it was a year ago.
Total mortgage application volume increased 1.1% week-over-week according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances ($ 510,400 or less) decreased from 2.90% to 2.85%, with points falling from 0, 33 to 0.35 (including origination fee) for loans with a 20% drop in payment.
“U.S. Treasury rates remained low last week, in part due to uncertainty over the prospects for further government stimulus linked to the pandemic, as well as concerns over the continued rise in Covid cases. 19 across the country, ”said Joel Kan, vice-associate of the MBA. president of economic and industrial forecasts.
Home loan refinancing applications, which are the most sensitive to mortgage rate fluctuations, rose 1% for the week, but were significantly 105% higher than the same week a year ago. Last year on this date, mortgage rates were 113 basis points higher. Refinancing now would give anyone who refinanced last year a substantial savings on their monthly payments.
Mortgage applications for the purchase of a home have increased 2% for the week and 26% per year. December is not usually a strong month for home sales, but demand continues to rise as Americans continue to work from home. They want more space, and some now have the ability to work from anywhere, giving them many more options for relocation.
“Home buying requests increased for the fourth time in five weeks as both the conventional and government segments of the market registered gains,” Kan said. a sign that more and more first-time buyers are entering the market. “
First-time buyers faced strong competition for a very low supply at the entry level of the market. Big investors keep coming in and home builders are not building enough low cost homes to meet demand. Lower-end home prices are rising the fastest, leaving some potential buyers on the sidelines.