In fact, mortgage demand just hit a record high! According to the Mortgage Bankers Association (MBA), total application volume was up 9.2% from the previous week on a seasonally adjusted basis. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances has fallen to 6.49%. This is the fastest pace of increase we’ve recorded since October ’24, driving the current record-breaking boom. Joel Kan, an economist with the MBA, noted that mortgage rates declined for the second consecutive week. Factors contributing to this decline include lower Treasury yields and signs of a cooling labor market.
This significant drop in interest rates has spurred a marked increase in both refinancing and home purchase applications. The refinance share of mortgage activity increased to 48.8% of total applications, up from 46.9% one week earlier. Home purchases continued crosscurrents in the home purchase market, as refinancing applications to buy a home soared by 12% this week. They were up 34% versus the same week last year. This amount of refinancing activity is the most we’ve seen since last July.
Kan highlighted the effect that this recent and steep drop-off in rates has had on the market and why borrowers today.
“The downward rate movement spurred the strongest week of borrower demand since 2022, with both purchase and refinance applications moving higher,” – Joel Kan.
Loans with a 20% down payment experienced a marginal decrease in average points. After including the impact of the origination fee, they went down from 0.59 to 0.56. Despite this positive trend, it is important to note that the current average rate remains 20 basis points higher than it was a year ago. Compared to the beginning of last year, those rates are significantly lower. They are well short of the levels we experienced at the height of May this spring homebuying season’s peak.
In terms of home purchases, mortgage applications flourished this week, increasing by 7%. That’s a mind-blowing 23% higher than the same week in 2022. Kan noted that there’s been a recent rise in adjustable-rate mortgage (ARM) applications.
“There was also a pickup in ARM applications, both in terms of level and share, as ARM rates were considerably lower than fixed-rate loans, which typically benefits homebuyers,” – Joel Kan.