After mortgage rates tumbled to 6.2% last week, mortgage applications surged, particularly for refinancing.
Total mortgage application volume rose 14.2% compared with the previous week, according to the Mortgage Bankers Association (MBA).
“Application activity was up significantly last week, as market expectations of a rate cut from the Fed pulled mortgage rates lower,” said Joel Kan, MBA’s vice president and deputy chief economist, in a press release. “Homebuyers are seeing improving affordability conditions, sparked by lower rates and slower home-price growth.”
Refinance applications jumped 24% from the prior week—which is 127% higher than the same time last year.
“That’s more than double last year’s pace,” noted Kan, adding that both conventional and government activity reached their fastest pace of refinancing since 2022.
Rates peaked at 7.79% nearly a year ago—and now, those buyers are starting to consider exiting their high-mortgage loans.
“Refinancing requests are up significantly and will continue to rise as more home purchasers from summer ’22 until this spring get to the point where refinancing even makes more sense,” said Fred Goncher, president of Backyard Mortgage Corp.
However, increased applications do not necessarily mean more people are completing refinances.
“Lots of folks are calling about refinancing, but the percentage moving forward isn’t like normal, in spite of quotes saving them $100 to $300 per month,” said Aaron Gordon, branch manager and senior mortgage loan officer at Guild Mortgage. “I think many are waiting for the Fed to drop rates to see how the mortgage market responds, and they believe that they may be able to save even more in the next three to six months.”
Others wait until monthly savings reach a specific threshold.
“The best reference is if they can save a car payment, it makes sense,” added Goncher.
Meanwhile, applications for both mortgages and refinances continue to increase. Gordon expects this trend to persist.
“Applications will continue to rise as more and more folks realize that 3% to 4% mortgage rates are not coming back anytime soon, if ever,” he explained.
“Folks with rates under 5% have changes in their lives that may mean giving up or renting out their home with the 3.5% rate for one that better fits their lives in the mid- to high-5%s,” concluded Goncher.
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