Refinancing demand surges on mortgage rates dropping
Nest Seekers International chief economist Erin Sykes weighs in as high interest rates continue to hurt the housing market on ‘The Bottom Line.’
Mortgage rates are still uncomfortably high for many would-be homebuyers and sellers, but recent declines have contributed to a significant boost in demand for refinancing.
The Mortgage Bankers Association (MBA) reported Wednesday that refinancing applications soared 35% last week, when rates for the average 30-year and 15-year fixed-rate mortgages hit their lowest point in more than a year, according to Freddie Mac.
A row of identical houses and yards in Queens, New York, on April 7. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images / Getty Images)
The surge in refinancing demand was the driving force behind the increase in overall demand for mortgage applications, which was up 15% on the week, the MBA said. For comparison, purchase applications only increased by 3%.
Year-over-year, refinancing demand was up 118%, MBA data showed.
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There was a particular jump in refinance applications for VA loans, which were up 77% from last week.
«Given the bond market’s sensitivity to data, this should only be a temporary bump in refinance applications, as mortgage bond prices have come down about 0.625 points from their highs on August 2nd,» said Emily Overton, Capital Markets Analyst at major VA lender Veterans United Home Loans.
Homes in Hercules, California, on Aug. 16, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Overton noted that, according to industry data, it’s estimated that approximately 200,000 VA loan borrowers have a mortgage rate of 7% or higher. The latest data
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