Homeowners are rushing to take advantage of falling mortgage rates, with applications to refinance home loans surging 20% last week compared to the previous week, according to data from the Mortgage Bankers Association (MBA).
The drop in mortgage rates has sparked a significant increase in refinancing activity, as the average interest rate for a 30-year fixed-rate mortgage fell to 6.13%, down from 6.15%.
This decrease in rates has driven the refinance share of mortgage applications to 55.7% of the total, a notable increase from the previous year. Demand for refinancing is now 175% higher than the same period a year ago, as homeowners seek to capitalize on potential savings amid declining borrowing costs.
Joel Kan, MBA’s vice president and deputy chief economist, highlighted the impact of the lower rates.
“The 30-year fixed rate decreased for the eighth straight week to 6.13%, while the FHA rate broke below the 6% threshold, spurring both conventional and government refinance applications,” he said.
While refinance demand surged, mortgage applications for purchasing homes rose just 1% for the week and were up 2% compared to a year ago. Despite the slight increase in home purchases, high home prices and limited inventory continue to challenge prospective buyers. The average loan size reached a new high of $413,100, driven by increases in both purchase and refinance applications.
With input from CNBC.
