"Indicative of the weakening job market, and in anticipation of a rate cut from the Federal Reserve, mortgage rates last week dropped to their lowest level since last October, with the 30-year fixed rate declining to 6.39%. Homeowners responded swiftly, with refinance application volume jumping almost 60% compared to the prior week, Mike Fratantoni, MBA's senior vice president and chief economist, said in a statement."
"Fratantoni added that even as 30-year fixed rates reached their lowest level in almost a year, more borrowers, and particularly more refinance borrowers, opted for adjustable-rate loans, with the ARM share reaching its highest level since 2008 at 12.9%. Notably, ARMs typically have initial fixed terms of five, seven, or ten years, so those loans do not pose the risk of early payment shock that pre-2008 ARMs did. Borrowers who do opt for an ARM are seeing rates about 75 basis points lower than for 30-year fixed-rate loans."
Mortgage refinance activity surged, with the refinance index up 58% from the previous week and 70% year-over-year, and the refinance share rising to 59.8% from 48.8%. The seasonally adjusted purchase index increased 3% week-over-week, while the unadjusted purchase index rose 12% from the prior week and 20% year-over-year. The average contract interest rate for 30-year fixed mortgages declined to 6.39%, the lowest since last October, prompting homeowners to rush into refinances and driving average refinance loan size to a 35-year survey high. The ARM share climbed to 12.9%, with ARMs offering roughly 75 basis points lower rates. FHA, VA, and USDA application shares shifted to 16.3%, 15.8%, and 0.5% respectively.
Read at www.housingwire.com
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