A sign is published in front of a house for sale in San Rafael, California, on August 7, 2024.
Justin Sullivan | Getty images
Mortgage rates last week fell to the lowest level since October last year. That caused a lot of refinancing, since consumers look for more savings in an uncertain economy.
Applications to refinance a mortgage loan increased 58% last week compared to the previous week and were 70% higher than the same week a year ago, according to the index seasonally adjusted from the association of mortgage bankers. The refinancing participation of the mortgage activity increased to 59.8% of the total applications of 48.8% the previous week.
This, as the average interest rate of the contract for a fixed rate mortgages with loans compliant loans, $ 806,500 or less, decreased to 6.39%of 6.49%, with points that decrease to 0.54 of 0.56, including the origin rate, for loans with an initial payment of 20%.
“The owners of housing with larger loans jumped first, since the average loan size in refinancing reached its highest level in the 35 years of history of our survey,” said Mike Fratantoni, Senior Vice President of MBA and chief economist.
Refinancing applications were particularly strong for adjustable rate mortgages (ARMS). The participation of the activity of the activity increased to 12.9% of the total applications, their highest level since 2008.
“In particular, the arms generally have fixed initial terms of five, seven or ten years, so those loans do not represent the risk of early payment shock that made it the arms prior to 2008. The borrowers who opt for one arm are seeing rates of approximately 75 lower basic points than by loans of fixed rate to 30 years,” said Fratantoni.
Possible housing buyers were not so vigorized by the fall of rates. Applications for a mortgage to buy a house increased 3% during the week and were 20% higher than the same week a year ago.
The mortgage rates moved even lower to start this week, before a possible interest rate cut by the Federal Reserve on Wednesday. The average rate in the fixed 30 years reached 6.13%, is the lowest level since the late 2022, according to a separate survey of Mortgage News Daily. However, some say that there could be a sale of bonds, resulting in higher rates, after a Fed rates cut, as happened last year.
