Falling Mortgage Rates Spur Application Frenzy
By Ben Eisen
Consumers are taking advantage of an unexpected decline in interest rates to buy homes and refinance their mortgages.
The volume of mortgage applications surged by 27% last week, according to a weekly survey released Wednesday by the Mortgage Bankers Association.
Much of the activity was spurred by falling rates, which pushed homeowners to trade higher-interest mortgages for lower-interest ones. Some 6.8 million borrowers stand to save at least 0.75 percentage point on a mortgage by refinancing, according to Black Knight Inc., a mortgage-data and technology firm.
Refinances were up 47% from the previous week, according to the Mortgage Bankers Association. Purchase applications were up 10% over the span, and many expect a continued boost in home sales as a result.
"I feel very good about the housing market," said Lawrence Yun, chief economist at the National Association of Realtors. "Inevitability, I believe that home sales, which have been down year-over-year for many consecutive months, will turn positive in the second half of this year."
Rates for 30-year fixed mortgages fell below 4% in recent weeks for their first time since 2017, and were most recently at 3.82%, according to a weekly average maintained by the government mortgage giant Freddie Mac. Mortgage rates typically track the yield on the benchmark 10-year Treasury note, which has flagged recently, as investors reconsider the current U.S. growth outlook.
For lenders, which were hit hard by rising rates last year, the reversal has been a welcome sign. The outlook for lenders' net profit margins turned positive for the first time in almost three years, according to a survey by Fannie Mae released Wednesday.
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