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.
“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.
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.
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.
“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.