Published Date 8/12/2024
It was bound to happen at one point. From the moment mortgage interest rates dropped to their lowest levels since May 2023, a surge in mortgage demand — especially refinances from current homeowners — is taking place.
According to CNBC’s Diana Olick and the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume rose 6.9% last week compared with the previous week. Volume was at the highest level since January of this year.
“Mortgage rates decreased across the board last week... following dove-ish communication from the Federal Reserve and a weak jobs report, which added to increased concerns of an economy slowing more rapidly than expected,” said Joel Kan, vice president and deputy chief economist at the MBA, in a release.
Olick reports that applications to refinance a home loan, which are most sensitive to weekly rate changes, jumped 16% for the week and were a whopping 59% higher than the same week one year ago. “While the percentage increases are large, they are still coming off a very small base. The vast majority of borrowers today have loans with rates below 5%. There are fewer than 1 million borrowers who can benefit from a refinance and shave at least 75 basis points off their current rate.”
Mortgage applications have not picked up as rapidly, with an increase of just 1% for the week, 11% lower than the same week a year ago. “Despite the downward movement in rates, purchase activity only saw small gains, with an increase in conventional purchase applications offset by decreases in government purchase applications. For-sale inventory is beginning to increase gradually in some parts of the country and home buyers might be biding their time to enter the market given the prospect of lower rates,” added Kan.
Good news can often be bad news for rates, however. While rates fell further to start this week following a stock market rout Monday, they rose sharply again on Tuesday after some more positive economic data. Olick quotes Mortgage News Daily’s Matthew Graham: “This is how things often play out when the bond market forces a quick move to extreme rate levels. For example, several of the biggest drops in daily mortgage rates have followed quick moves to long-term highs.”
CNBC, TBWS
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NMLS: 51519
Millenium Home Mortgage LLC
1719 Route 10 East, Suite 206, Parsippany NJ
Company NMLS: 51519
Office: 973-402-9112
Email: connie@mhmlender.com
NMLS: 51519
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