Americans are seizing any opportunity to refinance their mortgages.
In the week ending June 27, applications to refinance rose 7%, the Mortgage Bankers Association, an industry group, announced on July 2. Rates for home loans fell to the lowest since April that week, with the popular 30-year fixed-rate mortgage averaging 6.79% nationwide.
Refinance applications were a whopping 40% higher than a year earlier. In contrast, applications for purchase mortgages were unchanged.
The big jump in refinance application volumes is somewhat surprising given the small move in rates.
“Despite the small decline, mortgage rates continue to hover in the same 6%-7% range seen over the past year,” pointed out Kara Ng, a senior economist at Zillow, in a statement following the release. “Rates remain stuck in this range, reflecting competing economic signals: signs of a gradually cooling economy argue for lower rates, while persistent inflation supports upward pressure.”
“Homeowners are looking for any chance to save money on their housing costs, and even small savings can make a difference right now given the total cost of housing,” said Dan Richards, President of Flyhomes Mortgage, in an email exchange with USA TODAY.
“That’s part of what’s driving the recent uptick in refinancing,” Richards continued. “A lot of people who bought in the last few years have been waiting for mortgage rates to fall below that ‘magic’ 6% mark to refi, but another year has passed and it’s becoming clear that rates in the 6-7% range are the new normal.”
Many economists, including Zillow’s Ng, expect rates to make little moves from here, and traders in mortgage futures now expect the 30-year fixed-rate mortgage to average about 6.7% in November, according to the ICE Mortgage and Housing Market Research team.
This article originally appeared on USA TODAY: Refinance applications jump on lower mortgage rates
