These days, mortgage rates are hovering at or near all-time lows for nearly all types of home loans, and that has led many consumers to refinance so far year. That trend continued last week as well.
The number of refinance applications filed in the week ending September 28 led to a major surge in overall home loan interest, according to the latest data from the Mortgage Bankers Association. In all, applications for both refinances and new purchases rose a combined 16.6 percent — on a seasonally-adjusted basis — driven largely by consumers looking to make their monthly home loan payments more affordable.
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Refinance applications jumped 20 percent from the week prior, and rose to the largest total ever recorded by the MBA, the report said. In all, this type of loan dominated the mortgage market, accounting for 83 percent of all applications, which itself was up from 81 percent the previous week.
“Refinance application volume jumped to the highest level in more than three years last week as each of the five mortgage rates in MBA’s survey dropped to new record lows in the survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Financial markets continue to adjust to QE3, as the ongoing presence of the Federal Reserve as a significant buyer of mortgage-backed securities applies downward pressure on rates. Although there was a slight decline in the HARP share of refinance activity, the level of HARP volume remains steady.”
Meanwhile, purchase applications filed by would-be buyers increased significantly as well, rising 4 percent from the previous week, the report said. The unadjusted rate of new applications in this area was up 11 percent from the same time period in 2011.
Further, the average interest rate on a 30-year fixed mortgage slipped to just 3.53 percent last week, down from 3.63 percent just seven days earlier, the report said. Those for 15-year fixed-rate loans, meanwhile, fell to 2.9 percent from 2.98 percent.
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Americans may now be growing more interested in buying a home as affordability is still near all-time record lows. But the real improvement comes as a result of appreciating home values nationwide, which has spurred more owners to consider selling properties which may have previously been underwater.
Image: stacey svendsen, via Flickr