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November 14, 2024
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Mortgage Refinancing Surges by Nearly 35 Percent as Rates Drift Lower

The Epoch Times

Mortgage refinancing applications surged last week, reaching a two-year high as lower rates prompted homeowners to refinance.

Mortgage refinancing applications soared last week to their highest level in over two years, as borrowing costs drifted lower and homeowners seized the opportunity to refinance at lower rates, said the Mortgage Bankers Association (MBA) on Aug. 14.

The MBA’s mortgage refinancing index jumped by 34.5 percent for the week ending Aug. 9 compared to the prior week—and by a whopping 118 percent compared to a year ago. With the move, the refinancing index saw its strongest week since May 2022.

“Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week’s rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance,” Joel Kan, MBA’s vice president, said in a statement.

Overall mortgage applications rose 16.8 percent from the prior week, the highest level since January 2023.

“Additionally, purchase applications increased by 3 percent, with small gains seen across the various loan types, indicating that prospective homebuyers are slowly reentering the market,” Kan said.

Mortgage rates have drifted lower in recent weeks, following U.S. Treasury yields downward amid signs of softness in the labor market and other economic indicators, which fueled expectations that the Federal Reserve would cut interest rates soon.

A weak jobs report on Aug. 2 sent yields on the 10-year Treasury note, which are closely tied to mortgage rates, to their lowest since December 2023. This, in turn, drove the rates on the two most popular mortgages—the 15- and 30-year fixed—to their lowest levels in over a year (5.89 percent and 6.4 percent respectively) for a brief period.
Rates have since ticked up, though only slightly. On a weekly basis, they’ve drifted lower for two consecutive weeks, and on Aug. 14, they stood at 6.49 percent for the 30-year and 5.95 percent for the 15-year, according to the MND index.

Freddie Mac said that during the week of Aug. 8, mortgage rates hit their lowest level in more than a year, citing the weak jobs report.

“Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing,” Sam Khater, Freddie Mac’s Chief Economist, said in a statement. “The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move.

Despite the fact that mortgage rates have been holding below the 7 percent mark, housing prices continue to rise, putting the dream of owning one’s own home further out of reach for more Americans.

Data released on Aug. 13 by the National Association of Realtors (NAR) show that the median price of a single-family existing home in the United States grew by 4.9 percent over the past year to $422,100.

“It’s terrific news for homeowners who are moving ahead in wealth gains,” NAR chief economist Lawrence Yun said in a statement. “However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.”

Besides higher prices, first-time buyers also had to contend with limited inventory in the second quarter, according to NAR, which predicted that housing affordability would improve in coming months as more supply reaches the market.

In 48 percent of America’s housing markets, families needed a qualifying income of at least $100,000 to afford a 10 percent down payment mortgage, per NAR.

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