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Introduction:
As mortgage rates fall, homeowners are taking advantage of the opportunity to refinance their mortgages. According to the Mortgage Bankers Association (MBA), mortgage demand rose seasonally adjusted 7% in the latest week. This increase in demand has driven the market composite index up, reflecting increased activity in both purchases and refinancing.
The Refinance Index Jumps 14.6%:
The refinance index rose by 14.6%, although it is still down 77% compared to a year ago. The 30-year mortgage rate for homes sold for $726,200 or less was 6.2% for the week ending January 20, down from 6.42% the previous week.
Purchase Index Rises 3.4%:
The purchase index, which measures mortgage applications for home purchases, rose by 3.4% from the previous week. The average rate for the 30-year mortgage for homes sold for over $726,200 was 5.92%, while the average rate for the 15-year mortgage was 5.54%. The rate for adjustable-rate mortgages rose to 5.44%.
Market Still in a Slump:
Despite the rise in activity, the housing market is still in a slump due to the low number of homes for sale and high home prices that remain an affordability challenge. The spring selling season will determine if homeowners with ultra-low mortgage rates decide to sell.
What They’re Saying:
According to Joel Kan, Vice President and Deputy Chief Economist at the MBA, “Home buying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market.” Many buyers are waiting for affordability challenges to subside.
Conclusion:
The fall in mortgage rates is providing homeowners with the opportunity to refinance their mortgages, driving up mortgage demand and market activity. The forthcoming spring selling season will give us a better idea of the state of the housing market.
Looking to refinance your mortgage or buy a home? Contact me today to discuss your options and start taking advantage of lower mortgage rates.
