Mortgage Refinancing Surges on Record Low Rates

Record low fixed-rates are now starting to attract borrowers with a key index that gauges refinancing applications jumping 12.6 percent last week, according to the Mortgage Bankers Association.

The MBA’s overall market index – measuring both home purchase and refinance applications – rose 8.8 percent last week, compared to the week earlier.

Much of the activity was propelled by refinance applications. That index jumped 12.6 percent over the previous week.  It helped offset a 3.3 percent decline in the purchase applications index.

The refinance share of mortgage activity increased to 76.8 percent of total applications – from 73.8 percent the previous week. That is the highest refinance share the MBA survey since April 2009.

“Amid continuing financial market volatility, mortgage rates dropped again last week, with rates on 15-year loans reaching a record low for the MBA survey,” said Michael Fratantoni, MBA’s vice president of Research and Economics.   “Refinance applications jumped in response, but remain at about half the level seen in the spring of 2009,” “Purchase applications declined for the seventh time in the last eight weeks, keeping the purchase index near 13-year lows.”

Last week, Freddie Mac reported a record low for the 30-year fixed rate mortgage at 4.69 percent. The 15-year fixed rate continued to set new lows as well, down to 4.13 percent last week.

The MBA today said contracts last week averaged 4.67 percent on 30-year fixed-rate mortgages, down from 4.75 percent. The average on the 15-year fixed rate was 4.06 percent, down from 4.19 percent, the MBA said.

See Related Articles: 

• Home Prices Edge Up, But No Signs of a Hard Recovery
• Fixed Mortgage Rates Hit Record Lows: 4.69%; 4.13%
• Tax Credit Fadeout Sends New Home Sales Plummeting