Homeowners seeking to refinance are
experiencing savings as mortgage rates dropped again last week.
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| An aerial view of existing homes near new homes under construction (UPPER R) in the Chatsworth neighborhood on September 08, 2023 in Los Angeles, California |
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) declined to 7.07% from 7.17%, with points decreasing to 0.59 from 0.60 (including the origination fee) for loans with a 20% down payment, as reported by the Mortgage Bankers Association. This marks the lowest level since July.
"Mortgage rates dropped last week, as incoming data point to a slowing
economy and support a pivot by the Federal Reserve to begin cutting rates next
year," stated Mike Fratantoni, MBA senior vice president and chief
economist.
Consequently, applications to
refinance a home loan increased by 19% last week compared to the previous week,
according to the Mortgage Bankers Association's seasonally adjusted index.
Refinance demand was 27% higher than the same week one year ago.
"Borrowers who had seen rates near 8% earlier this fall are now seeing some lenders quote rates below 7%. Refinance volume picked up in response to this drop in rates, with a particularly notable increase for FHA and VA refinance applications," Fratantoni added.
Applications for a mortgage to
purchase a home increased by 4% for the week, although they remain 18% lower than
the same week last year. Despite the advantage of lower mortgage rates for
today's homebuyers, the market is characterized by fierce competition, high
prices, and a limited inventory of homes for sale.
Mortgage rates have shown little
movement this week, with economic data aligning with expectations. The outcome
of the latest Federal Reserve meeting and comments from Chair Jerome Powell on
Wednesday could potentially influence this trend. Market expectations
anticipate the Fed to maintain its benchmark rate, with potential cuts
anticipated for the following year.
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