Ongoing fallout from the Brexit vote abroad is pushing down U.S. mortgage rates closer to their all-time lows, and as a result, mortgage refinancing applications are surging.
The Refinance Index from the Mortgage Bankers Association increased 21 percent last week from the previous week to the highest level since January 2015. Overall, applications for both purchases and refinancing jumped 14 percent.
Meanwhile, this week the average 30-year fixed-rate mortgage dropped to 3.41 percent, from 3.48 percent last week, according to Freddie Mac. That puts that key mortgage rate just 10 basis points from its November 2012 all-time record low of 3.31 percent.
As investors pour into U.S. Treasuries for safe haven, rates continue to fall, said Sean Becketti, chief economist, Freddie Mac.
“Continuing fallout from the Brexit vote drove Treasury yields lower again this week,” Becketti said. “The 30-year fixed-rate mortgage followed Treasury yields, falling 7 basis points to 3.41 percent in this week’s survey. Mortgage rates have now dropped 15 basis points over the past two weeks, leaving them only 10 basis points above the all-time low.”
The refinance share of mortgage activity increased to 61.6 percent of total applications, the highest level since February 2016, from 58.1 percent the previous week.
“Interest rates continued to drop last week as markets assessed the impact of Brexit, downgrading the likelihood of additional rate hikes by the Fed …” said Mike Fratantoni, MBA’s Chief Economist. “In response, refinance application volume jumped almost 21 percent last week to its highest level since January 2015.”
Here is Freddie Mac’s overview of mortgage rates for this week:
30-year fixed-rate mortgage (FRM) averaged 3.41 percent, with an average 0.5 point for the week ending July 7, 2016, down from last week when it averaged 3.48 percent. A year ago at this time, the 30-year FRM averaged 4.04 percent.
15-year FRM this week averaged 2.74 percent, with an average 0.4 point, down from last week when it averaged 2.78 percent. A year ago at this time, the 15-year FRM averaged 3.20 percent.
5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.68 percent this week, with an average 0.5 point, down from last week when it averaged 2.70 percent. A year ago, the 5-year ARM averaged 2.93.