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Consumers returned from the holiday season to find mortgage rates at their lowest level since September, and they are responding in dramatic fashion.
Mortgage application volumes last week jumped nearly 28% from the week before, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($726,200 or less) fell to 6.23% from 6.42%, with the score falling to 0.67 from 0.73 (including origination fees) for loans of 20%. premium.
Rates hit a recent high of around 7.2% at the end of October according to the MBA survey, but ended the year at 6.58%. One year ago, the average rate on a 30-year straight basis was 3.64%.
Refinancing demand made the biggest move, up 34% from the previous week, but still 81% lower than the same week a year ago. The share of refinancing in mortgage activity rose to 31.2% of total applications from 30.7% in the previous week.
Mortgage applications for a home were up 25% week over week but were 35% lower than the same week one year ago.
“As we get into the beginning of the spring buying season, lower mortgage rates and more homes in the market will help affordability to first-time homebuyers,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
However, the market is not seeing any increase in inventory. The number of active listings is about 21% higher than it was a year ago, according to Redfin, a real estate brokerage firm. This is mostly because homes have now been on the market for much longer, with much fewer sales. New listings for homes for sale are down 22% year over year.