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Lower Rates Cause Refinance Applications to Surge

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Lower Rates Cause Refinance Applications to SurgeThe total number of mortgage applications surged 13 percent in the week ending June 10 largely due to a spike in refinances, according to the latest weekly data from the Mortgage Bankers Association. Refinance applications jumped 16.5 percent, while those for purchases climbed less dramatically, by 4.5 percent.

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“Mortgage rates have declined for eight of the past nine weeks,” said Michael Fratantoni, MBA’s vice president of research and economics. “Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November”The volume of refinance applications still remains 28 percent below levels seen at that time, as borrowers with an incentive to refinance remain constrained from doing so by lack of equity in their homes.”

Overall, interest rates dipped to an average of 4.51 percent last week, a slight decline from the previous week’s 4.54 percent, the report said.
The increase saw the refinance share of the whole mortgage market climb to 70 percent, up from 67.3 percent, the report said. This was the largest share of the market refinances have held since the week ending January 21.

Many consumers may seek to refinance their existing mortgage when rates continually decline because doing so will typically lower the cost of their monthly payments significantly.

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