Mortgage rates fall for a second week in a row — and refinances soar 117%
The numbers: Applications for mortgages surged as homeowners jumped on lower rates to refinance their home loans.
The 30-year mortgage rate fell for the second week in a row to the lowest level in a year.
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The drop in rates pushed the market composite index — a measure of mortgage-application volume — up last week, the Mortgage Bankers Association said Wednesday.
The market index rose 16.8% on a weekly basis, to 251.3 for the week ending August 9. A year ago, the index stood at 193.
The index is now at the highest level since January 2023.
Key details: The purchase index — which measures mortgage applications for the purchase of a home — rose 2.8% from the week prior.
Meanwhile, the refinance index jumped by 34.5% on a weekly basis, and was 117% higher than a year ago.
A separate report from Fannie Mae on Tuesday also showed that refinance applications rose by 33% from the previous week, with activity jumping to the highest level since August 2022, when rates were closer to 5%.
The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 6.54% for the week ending August 9. That was down from 6.55% the previous week.
The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 6.78%, up from 6.77% a week prior.
The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.49%, unchanged from the week before.
The 15-year was down to 5.96%, from 6.03% the previous week.
The rate for adjustable-rate mortgages was up to 6.04%, from 5.91% the week prior.
The big picture: Lower mortgage rates are spurring some activity in the housing market — though it’s not quite on the path to recovery just yet.
Nearly 90% of homeowners with a mortgage have a rate of less than 6%, and 81% have a rate below 5%, according to Fannie Mae — so most borrowers would need rates to fall even further before they refinance their mortgages.
And home buyers are also holding back, as evidenced by the minor increase in purchase applications over the last week.
What the MBA said: “Rates on both 30- and 15-year fixed-rate mortgages decreased … 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, vice president and deputy chief economist at the MBA, said in a statement.
“The refinance index also saw its strongest week since May 2022 … driven by gains in conventional, FHA and [Veterans Affairs] applications,” he added.
