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Consumers have returned from the holiday season to find mortgage rates at their lowest level since September, and they are reacting dramatically.
The volume of mortgage applications jumped nearly 28% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) fell from 6.42% to 6.23%, with points rising from 0.73 at 0.67 (including origination fees) for loans with a 20% decline. Payment.
Rates hit a recent high of around 7.2% in late October according to the MBA survey, but ended the year at 6.58%. A year ago, the average rate on the 30-year fixed was 3.64%.
Refinancing demand made the biggest move, up 34% from the previous week, but was still 81% lower than the same week a year ago. The refinancing share of mortgage activity rose to 31.2% of total applications from 30.7% the previous week.
Mortgage applications to buy a home were up 25% week over week, but were 35% lower than the same week a year ago.
“As we enter the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers,” said Mike Fratantoni, vice-president Principal Chairman and Chief Economist at the MBA.
The market, however, 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 agency. This is mainly because homes are now on the market longer, with far fewer sales. New listings of homes for sale are down 22% year over year.