Homeowners are scrambling to refinance their mortgages now that rates are falling.
Applications to refinance mortgages surged 8 percent last week as rates dropped for the fourth straight week, the Mortgage Bankers Association said Wednesday.
The refinancing volume drove a 2.4% increase in overall mortgage applications compared to the prior week, MBA said. The 30-year fixed rate mortgage hit its lowest level since January 2018 at 4.33%, down from 4.4% the previous week, the trade group said.
“There was an increase in average refinance loan sizes, as borrowers with larger balances responded accordingly to lower rates,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
Meanwhile, home buyers didn’t respond as positively to the lower rates. Applications to purchase a home fell 2% from a week earlier, the second straight weekly decline.
Home sales also have pulled back this spring. Sales of existing homes slipped 0.4% last month, dropping for the second straight month, the National Association of Realtors said this week.
“Purchase activity declined again, but remained around 7% higher than a year ago.” Kan said. The reason may due to “some adverse effects of the ongoing global trade disputes on overall demand.”
“Some potential home buyers may be delaying their home search until there’s more certainty,” Kan added.
Also, there’s a shortage of less expensive, entry-level homes that has driven up their prices.
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The share of total mortgage applications guaranteed by the Federal Housing Administration decreased to 9.4% from 10.1% the week prior.