A recent dip in mortgage rates has prompted a significant increase in homeowners refinancing their loans. The Mortgage Bankers Association reported a 16% spike in refinancing applications last week, reaching the highest level in two years. Compared to the same week last year, refinancing applications surged nearly 60%. This contributed to a rise in overall home loan applications, although purchase applications saw just a modest 0.8% increase from the previous week.
Despite declining borrowing costs, high housing prices and limited inventory deter many potential buyers. Joel Kan, deputy chief economist at the MBA, noted, "For-sale inventory is beginning to increase gradually in some parts of the country and homebuyers might be biding their time to enter the market given the prospect of lower rates." The average 30-year mortgage rate dropped to 6.73%, its lowest since early February, yet remains significantly higher than rates from the previous years.
Mortgage rates, which surged to a 23-year high of 7.79% in October, are now easing due to signs of slowing inflation and a cooling job market. These changes have sparked expectations of a Federal Reserve rate cut next month. As Doug Duncan from Fannie Mae mentioned, sustained lower rates could lead to another rise in refinance applications. This optimism has positively impacted mortgage companies, with shares of Rocket Cos., United Wholesale Mortgage, and LoanDepot all experiencing gains in the third quarter. (This story was generated by Newser's AI chatbot. Source: the AP)
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