Home Owners Rush to Refinance
October 5, 2016
A drop in mortgage rates last week seduced more home owners looking to lower their monthly payments. Refinancings led a seasonally adjusted 2.9 percent gain in mortgage application volume, which also accounts for home purchases, last week, the Mortgage Bankers Association reported Wednesday. Refinance applications increased 5 percent from the previous week, as the 30-year fixed-rate mortgage dropped to 3.62 percent, the lowest average since July.
Meanwhile, applications for home purchases, which are viewed as a leading gauge of future buying activity, dropped just 0.1 percent last week and are down 14 percent from a year ago. The large year-over-year drop is due to mortgage rules that took effect last year, says Michael Fratantoni, MBA's chief economist.
"The mortgage industry is celebrating the one-year anniversary of the TRID/KBYO regulatory implementation date this week," Fratantoni says. He adds that there was a spike in mortgage-application activity just before the new rules took effect, which explains the severity of the decrease in year-over-year volume.
Source: “European Bank Fears Helped Boost U.S. Mortgage Applications 2.9%,” CNBC (Oct. 5, 2016)
Updated: September 25, 2018