Another record low mortgage rate only increased mortgage demand

Mortgage rates have hit record lows more than a dozen times this year, and there was another one last week. This resulted in a 3.9% increase in mortgage application volume from the previous week, according to the seasonally adjusted index of the Mortgage Bankers Association.

Refinance requests led the way, up 5% for the week, the fastest rate since last April. The volume was 79% higher than the same week a year ago. The refinancing share of mortgage activity rose from 69.8% in the previous week to 71.1% of total applications.

The average contract rate for 30-year fixed rate mortgages with compliant loan balances ($ 510,400 or less) dropped from 2.99% to a survey low of 2.92%, with credit scores at 0.37% (including the origination fee) to 0 .35 fell a 20% deposit.

“Weekly mortgage rate volatility has re-emerged as markets react to fiscal uncertainties and a resurgence of Covid-19 cases across the country,” said Joel Kan, vice president of industrial and economic forecasting at MBA.

While more than 4 million borrowers have already refinanced their home loans this year, refinancing could save more than 19 million more on their monthly payments, according to a recent calculation by Black Knight, a mortgage technology and data provider. Today’s average mortgage rate is a full percentage point lower than it was a year ago.

Homebuyers receive an additional incentive from today’s rates despite the sharp rise in home prices. Home purchase mortgage applications rose 4% over the week and were 19% higher than the same week a year ago.

“Amid fierce competition for limited homes for sale and rapidly rising property prices, purchase requests for both conventional and government borrowers increased. In addition, buying activity has exceeded last year’s level for over six months,” said Kan.