A recent drop in mortgage interest rates has encouraged many homebuyers to take action. More homeowners are also finding relief with lower monthly payments.
According to the Mortgage Bankers Association, mortgage applications surged by 9.2% last week compared to the previous week. This jump follows recent trends affected by the Labor Day holiday.
The average interest rate for a 30-year fixed mortgage fell to 6.49%, down from 6.64%. This is the lowest rate seen since October 2024. Joel Kan, an economist with the MBA, noted that the decline in rates came as Treasury yields dipped, suggesting a weakening labor market. “We saw the strongest demand from borrowers since 2022,” Kan commented, as both purchase and refinance applications increased.
Refinancing applications rose by 12% for the week and were up by 34% compared to the same week last year. This made refinancing account for nearly half (48.8%) of all mortgage applications, increasing from 46.9% the week before. While current rates are 20 basis points higher than a year ago, they remain significantly lower than at the start of last year or during the peak of the spring homebuying season.
Applications for new home purchases also saw a boost. They climbed 7% for the week and were 23% higher than last year, marking the best levels since July. Interest in adjustable-rate mortgages (ARMs) has also increased, as they offer lower rates compared to fixed-rate loans.
While rates started to inch up slightly this week, two key inflation reports are expected soon. These could lead to further movements in mortgage rates.
As the housing market shifts and interest rates change, it’s important for buyers to keep informed. The current climate may provide ideal conditions for both purchasing new homes and refinancing existing loans.
For real estate insights and trends, check out industry experts like CNBC’s real estate coverage here.
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