Rates Hit Lowest Point Since 2016, Sending Refi Apps Soaring

Mortgage Weekly Update

Refinances hit their highest point since 2013 this week, surging 15% over last week and a whopping 183% over this time last year. Overall, refinancing applications accounted for nearly 65% of all mortgage activity in the country.

The uptick was likely driven by the week’s low rates, which saw 30-year, fixed-rate loans average 3.71% — a drop of 10 basis points from the week prior and the lowest rate seen in more than three years. 

According to Joel Kan, the associate vice president of economic and industry forecasting for the mortgage bankers association, growing concern surrounding the coronavirus caused the dip in rates.

“The 10-year Treasury yield fell around 20 basis points over the course of last week, driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus,” Kan says. “This drove mortgage rates lower, with the 30-year fixed-rate decreasing for the fifth time in six weeks to 3.71% — its lowest level since October 2016.

There was also a rise in adjustable-rate loans, jumbo loans, FHA loans, and the average loan amount, according to MBA’s data. Purchase loan activity was also up, though not as much (10% for the week and 11% over the year.)

“Prospective buyers weren’t as responsive to the decline in mortgage rates, likely because of suppressed supply levels,” Kan says. 

More in Mortgage News

  • Mortgage fraud is down. The number of defects, misrepresentation, and fraudulence in mortgage applications was down 1.5% in December, according to new data from First American.
  • Homebuyers are now four times as likely to be equity-rich than they are to be seriously behind on their mortgage. According to ATTOM Data Solutions, 14.5 million homeowners are equity-right, while only 3.5 million are seriously underwater.
  • The Federal Housing Finance Agency officially hired an advisor to help with the privatization of Fannie Mae and Freddie Mac. Though there’s no timeline in place just yet, it does indicate a change is on the horizon for the GSEs.

The Week in Mortgage Rates

Interest rates dropped across the board this week, except on 5/1 ARMs. Here’s what the average rates looked like for each individual loan type, according to MBA’s weekly survey:

  • All 30-year, fixed-rate loans: 3.71%, 0.28 points
  • Jumbo 30-year, fixed-rate loans: 3.70%, 0.19 points
  • FHA 30-year, fixed-rate loans: 3.80%, 0.26 points
  • 15-year, fixed-rate loans: 3.19%, 0.23 points
  • 5/1 ARMs: 3.23%, 0.15 points

Make sure to check back here next week for the latest rates and mortgage news.

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Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.