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Brief drop in mortgage rates causes sudden surge in refinancing

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Miami real estate agents show a property to potential buyers.

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The first good news is that mortgage rates have dropped briefly. omicron variantLast week saw a dramatic rise in mortgage refinance demand. It will probably be short-lived.

When you compare the weekly average for 30-year fixed rates, it was not a dramatic drop in rate. It fell to 3.30% on loans with conforming loan amounts (548,250 or less) and points dropped to 0.39 (includes the origination fee), for loans with 20% down payments, according to Mortgage Bankers Association.

That was again the average. The rates had fallen sharply towards the end of last week, and then they remained there until Tuesday. Rates started to rise Wednesday.

The increase was sufficient to result in a seasonally adjusted 9% rise in refinance requests week to week. However, they were still 37% below the previous week. These mortgage rates were still 40 basis points below the same week last year.  

The FHA (Government) refinance market saw a dramatic 20% increase in weekly demand. Refinance activity accounted for 63.9%, up from 59.4% last week.

While the fixed 30-year mortgage rate and the fixed 15-year mortgage rate declined by one basis point each, FHA rates fell seven basis points. This drove the rise in government refinances. These opportunities are being taken advantage of by borrowers, however, if interest rates rise as MBA forecasts, then the window for refinance will shrink,” Joel Kan, an MBA economist, said.

For mortgage applications to buy a house, which tend to be less affected by weekly rate changes and are therefore more flexible to them, the week ended 5% lower than last year. They were also 8% lower in the previous week. After four weeks of consecutive gains, this is the fourth week in a row.

Kan stated that “Activity remains close to its highest level since March 2021,” which is a good sign as the year ends.

According to Mortgage News Daily, mortgage rates rose 11 basis points this week. In loose alignment with the U.S. Treasury yield, mortgage rates follow closely.

There is still much uncertainty. However, more news headlines focus on ‘lower severity covid symptoms’ for omicron patients.  As a result of this, investors have returned to the stock market and bonds have been affected,” Matthew Graham, COO at Mortgage News Daily.

 

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