Mortgage rates last week dropped to the lowest level in a month, pushing more borrowers to refinance. Potential homebuyers, however, were not as enthused.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased last week to 6.37% from 6.42%, with points decreasing to 0.59 from 0.61, including the origination fee, for loans with a 20% down payment.
As a result, applications to refinance a home loan, which are most sensitive to weekly changes in interest rates, rose 4% for the week and were 81% higher than the same week one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. The rate on the 30-year fixed was 15 basis points higher a year ago.
“The refinance index increased 4 percent, driven by a 6 percent increase in conventional refinances and a 12 percent increase in FHA refinance applications, as borrowers remain attentive to these opportunities to lower their monthly mortgage payment. VA refinances bucked the trend and were down 12 percent,” said Joel Kan, an MBA economist in a release.
Kan noted that demand for adjustable-rate mortgages rose again.
