A sign was posted in front of a home for sale in San Rafael, California on August 7, 2024.
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Mortgage rates fell to their lowest level last week since October. It has caused a massive run in refinancing as consumers seek more savings in an uncertain economy.
Mortgage refinance applications rose 58% last week compared to last week, 70% higher than the same week a year ago, according to the Mortgage Bankers Association’s Seasonal Adjustment Index. The refinance share of mortgage activities increased from 48.8% the previous week to 59.8% of total applications.
This was below $806,500, the average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances, down from 6.49% to 6.39%, with points falling from 0.56 to 0.54 for 20% down payment loans.
“We are pleased to announce that Mike Fratantoni, MBA’s Senior Vice President and Chief Economist,” said:
The refinance application was particularly powerful for adjustable mortgages. Activity arm share has increased to 12.9% of the overall application, reaching its highest level since 2008.
“In particular, these loans do not pose the risk of early payment shocks made by weapons before 2008, especially since weapons usually have initial fixed conditions of five, seven or ten years. Borrowers who choose weapons are seeing a rate of 75 basis points lower than a 30-year fixed rate loan,” Fratantoni added.
Potential home buyers were less cheered by the lower rates. Mortgage applications to buy mortgages rose 3% a week, 20% higher than the same week a year ago.
The mortgage rate has been lowered even further to begin this week ahead of potential interest rate cuts cut by the Federal Reserve on Wednesday. Another study with Mortgage News Daily shows that the average hit for a 30-year fixed year was 6.13%, the lowest level since the end of 2022. However, some say bond sales could be followed by the Fed rate cuts that occurred last year, leading to a higher rate.
