Mortgage Rates Hit Their Lowest Point in 7 Years; Applications Surge as a Result
It was a big week in the mortgage industry.
According to the Mortgage Bankers Association, rates on 30-year, fixed-rate mortgages dropped to their lowest point in over seven years, and overall mortgage applications bumped up 15% as a result.
Purchase activity was 10% higher than a year ago, while refinance applications increased a whopping 224% over the year. Refinances accounted for 66.2% of all mortgage activity for the week, a jump over the 60% share seen the week prior.
According to Mike Fratantoni, senior vice president and chief economist at MBA, the rate drop (and surge in activity) were largely due to increasing concerns around the coronavirus.
“Refinance demand jumped as a result, with conventional refinance applications increasing more than 30%,” Fratantoni said. “Given the further drop in Treasury rates this week, we expect refinance activity will increase even more until fears subside and rates stabilize.”
More in Mortgage and Housing News
- CoreLogic reported that average mortgage payments are down almost 7% thanks to low mortgage rates. Average payments have dropped for eight consecutive months. They’re currently 35% lower than their peak, reached in June 2006.
- The House passed the “Yes in My Backyard” act on Monday, encouraging communities to take control of the housing affordability issues their residents are facing.
- Freddie Mac released data on the scope of America’s housing shortage. According to the report, the nation is short 3.3 million housing units. The shortage is worsening by about 300,000 units per year. Oregon, California, and Minnesota have the biggest shortages.
- The Federal Reserve made an emergency rate cut on Tuesday, reducing the federal funds rate by 0.50%. The move was intended to spur economic activity amid growing concerns around the coronavirus.
- Construction spending hit an all-time high, according to the Census Bureau. January spending clocked in at over $1.3 trillion, up 1.8% for the month and 6.8% for the year. Residential construction alone was up 2%.
The Week in Mortgage Rates
Interest rates dropped on all mortgage products except jumbo loans, which held steady for the week.
Here a look at how rates shook out by loan product:
- All 30-year, fixed-rate loans: 3.57%, 0.26 points
- Jumbo 30-year, fixed-rate loans: 3.72%, 0.20 points
- FHA 30-year, fixed-rate loans: 3.74%, 0.25 points
- 15-year, fixed-rate loans: 3.03%, 0.24 points
- 5/1 ARMs: 3.12%, 0.14 points
Be sure to check back next week for the latest rates and mortgage news, and reach out to an Embrace Home Loans team member if you have questions. We’re here to help.
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