Mortgage rates sink to the lowest level in a month, sparking more refinance demand

Mortgage interest rates fell to a one-month low last week, prompting more existing borrowers to seek savings through refinancing. While lower rates didn’t provide much incentive to potential buyers, the refinancing flow was enough to boost total mortgage demand by 2.8% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with loan balances of $832,750 or less decreased from 6.21% to 6.17%; Points including the origination fee for loans with 20% down payment remained unchanged at 0.56.

“Treasury yields finished the week lower as weak data on retail sales and home sales outweighed better-than-expected readings in the labor market in January,” Joel Kan, MBA’s executive vice president and deputy chief economist, said in a statement.

As a result, applications to refinance a mortgage increased 7% for the week and were 132% higher than the same week a year ago. Last year, rates were 76 basis points higher. While this annual jump seems big, refinancing was at extremely low levels this time last year.

“Refinancing applications increased across all loan types, marking the strongest week for refinancing since mid-January,” Kan said. he added.

Mortgage applications to buy a home fell 3% this week and were just 8% higher than the same week a year ago. While lower mortgage rates are making homes slightly more affordable, new supply is not coming to market fast enough and concerns about the broader economy are keeping consumers on the sidelines.

Mortgage rates have not moved at all as we begin this holiday-shortened week, but economic data to be released this week could affect the current trend. However, in general, mortgage loan interest rates have been in a very narrow range between 6% and 6.25% since the beginning of this year.