LOS ANGELES (AP) A recent pullback in mortgage rates is spurring more homeowners to refinance their home loan and lower their monthly payments.
The Mortgage Bankers Association's refinance index, which tracks home loan application volume, surged 16% last week from the previous week to its highest level in two years, the association said Wednesday.
Refinance applications were up nearly 60% versus the same week last year.
Homeloan applications rose overall last week to their highest level since January, though much of that was due to the surge in refinance applications.
Despite the lower borrowing costs, applications for loans to buy ahomerose only 0.8% from the previous week and were down about 11% from a year earlier, the MBA said.
For manyhomeshoppers,mortgagerates remain too high, given record-highhousingprices and a chronic shortage ofpropertieson the market.
For-sale inventory is beginning to increase gradually in some parts of the country and homebuyers might be biding their time to enter the market given the prospect of lower rates, saidJoel Kan, the MBAs deputy chief economist.
The average rate on a 30-yearmortgagewas 6.73% last week, its lowest level since early February, according tomortgagebuyerFreddie Mac. The average rate declined again this week, falling to 6.47%, the lowest level in more than a year.
After jumping to a 23-year high of 7.79% in October, the average rate has mostly hovered around 7% this year more than double what it was just three years ago.
The elevatedmortgagerates, which can add hundreds of dollars a month in costs for borrowers, have discouragedhomeshoppers, extending the nationshousingslump into its third year.
Rates have mostly eased in recent weeks as signs of easing inflation and a cooling job market have raised expectations that the Federal Reserve will cut its benchmark interest rate next month. Mortgage rates are influenced by several factors, including how the bond market reacts to the Feds rate moves.
If the recent drop in longer-term rates is sustained, then we expect to see another uptick in refinance applications and subsequent refinancemortgagevolumes this week, saidDoug Duncan, chief economist atFannie Mae. Themortgagebuyer's own index of refinance activity shows that refinance applications climbed 20% last week from the previous week.
Rates will have to fall further before more homeowners are incentivized to refinance, given that some 86% of all outstandinghomemortgageshave an interest rate below 6%, and more than three quarters have a rate 5% or lower, according to Realtor.com.
Still, expectations that rates will continue to ease and prompt more homeowners to refinance have helped lift shares inmortgagecompanies so far in the third quarter.
If you need help with refinancing or buying or selling real estate, please call me, Marie McLaughlin 727-858-7569.
Source: https://www.floridarealtors.org/news-media/news-articles/2024/08/homeowners-race-refinance-home-loans
