Mortgage rates hit a four-year low last week, causing more borrowers to refinance and more potential homebuyers to exit.
According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume increased 11% compared to the previous week.
Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $832,750 or less was unchanged from the previous week at 6.09%, with points for loans with a 20% down payment decreasing from 0.53 to 0.52, including the origination fee. This rate is the lowest since 2022. Last year, this rate was 64 basis points higher.
Home loan refinance applications, which are most sensitive to weekly interest rate changes, rose 14.3% from the previous week and were 109% higher than the same week a year ago.
“Refinance applications rose for the fourth straight week at the strongest pace since 2022, with conventional refinances increasing 20 percent,” MBA analyst Joel Kan said in a press release. “The increase in the average loan size for refinances suggests that more borrowers with larger loan sizes are looking to lower their monthly payments.”
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Mortgage applications to purchase a home rose 6.1% this week, 10% higher than the same week a year ago. Despite the harsh weather in the Northeast last week, buyers are clearly gearing up for the spring real estate market. Some more inventory is coming onto the market, but buyers are still facing high prices and uncertainty in the overall economy.
Mortgage rates rose sharply on Monday, according to a separate survey from Mortgage News Daily. This was in response to the US and Israeli attacks on Iran and the resulting war. They didn’t move on Tuesday but could see another rise as more economic data is released later this week, ending with the government’s monthly jobs report on Friday.