Mortgage Rates Decline Again, Spurring Refinance Surge
Mortgage rates fell for the third consecutive week, prompting a surge in refinance applications. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage demand rose 5.4% compared to the previous week, driven by a 27% increase in refinance applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.67%, with points falling to 0.66. Applications to refinance a home loan surged 42% higher than the same week one year ago, likely due to the base volume being still relatively small.
The refinance share of mortgage activity increased to 46.8% of total applications from 38.7% the previous week. Applications for a mortgage to purchase a home, however, fell 4% for the week but were 4% higher than the same week one year ago.
Mortgage rates gained 10 basis points to start this week, erasing much of last week’s drop. The market is now waiting for the release of the monthly consumer price index on Wednesday, which could swing mortgage rates in either direction.
The Federal Reserve is set to make a decision on interest rates next week, and the CPI data is the last significant piece of information it will receive before making a decision. As such, a big deviation from forecasts could be enough to get mortgage rates moving.