Americans are scrambling to refinance mortgages as borrowing costs tumble.
With mortgage rates falling to the lowest level since September 2017, total mortgage applications surged 26.8% last week, led by an increase in refinancing, the Mortgage Bankers Association (MBA) said Wednesday.
Applications to refinance mortgages jumped a whopping 47% from the prior week to the highest level since 2016.
Mortgage applications to buy a home also perked up, increasing 10% after several weeks of lackluster showings as house shoppers finally responded to falling rates.
The average contract interest rate for 30-year fixed-rate mortgages with loan balances of $484,350 or less dipped to 4.12% from 4.23%.
“Mortgage rates for all loan types fell by a sizeable margin for the second straight week, pulled down by trade tensions with China and Mexico, the financial markets reacting to more bearish communication from several Fed officials, and weaker than expected hiring in May,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.Said Kan.
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“Demand is still relatively strong, but there is likely some restraint from prospective buyers, driven by some economic uncertainty.” Kan added.
Housing supply is still limited for entry-level homes, curtailing home sales.