Mortgage demand roars back to life as rates drop to lowest level in a year
A key measure of home-purchase applications surged last week as mortgage rates dropped to the lowest level in more than a year.
The Mortgage Bankers Association's (MBA) index of mortgage applications jumped 6.9% for the week ended Aug. 2, according to new data published Wednesday. At the same time, the average rate on the popular 30-year loan dropped to 6.55% last week from 6.82%. It marked the lowest level for interest rates since May 2023.
«Mortgage rates decreased across the board last week,» said Joel Kan, MBA's deputy chief economist. He said the decline follows «doveish communication from the Federal Reserve and a weak jobs report, which added to increased concerns of an economy slowing more rapidly than expected.»
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Homes in Centreville, Maryland, on April 4, 2023. (Photographer: Nathan Howard/Bloomberg via Getty Images / Getty Images)
The drop in rates also fueled a surge in refinancing applications, which rose 16% for the week and were 59% higher than the same week one year ago.
Refinancing allows homeowners to essentially take out a brand-new loan on their property, which is typically used to pay off the original mortgage. It can offer several benefits, including a lower interest rate, a lower monthly payment or a shorter loan life.
Rising home values can give homeowners the opportunity to refinance on more favorable terms. Persistently high mortgage rates, however, have discouraged many homeowners to refinance recently.
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Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey.
Homes in Hercules, California, on Aug. 16, 2023. (Photographer: David Paul Morris/Bloomberg via
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