Mortgage refinance demand is 94% higher than a year ago | Wilnesh News

With interest rates falling for a fifth straight week, mortgage demand is now heavily skewed toward refinancing.

Total mortgage applications last week increased just 1.6% from the previous week, according to the Mortgage Bankers Association’s Seasonally Adjusted Index.

The average contract interest rate for a 30-year fixed-rate mortgage with qualifying loan balance ($766,550 or less) fell from 6.44% to 6.43%, while the payment for loans with 20% down increased from 0.54 (including origination fee) to 0.56. The rate was 78 basis points higher than the same week a year ago.

Applications for home loan refinancing fell 0.3% this week but were 94% higher than a year ago. This may seem like a huge increase, but in reality the number is very low. Still, it’s a bright spot for a business that’s been tipped off a cliff by rising interest rates and weak home buying.

“Refinancing applications declined slightly, but still showed strong annual growth, as borrowers with higher interest rates have been refinancing to lower their monthly payments,” said MBA economist Joel Kan. “Refinancing applications in August were The refinancing share averaged nearly 46%, the highest monthly average since March 2022.”

Mortgage applications for home purchases increased 3% this week, but are still 4% lower than this time last year. Home sales were very slow over the summer as buyers faced sky-high home prices; interest rates weren’t falling enough to bail them out.

The modest increase was driven by demand for government loans. FHA and VA loans offer low or no down payment options and are popular with low-income buyers.

Mortgage rates were little changed on Tuesday as all eyes are on the monthly jobs report and other economic data due later in the week.