WASHINGTON–A decline in interest rates is being credited for a surge in mortgage refinancing activity, especially with larger loans.
The Mortgage Bankers Association reported last week that total mortgage application volume increased 9.3% on a seasonally adjusted basis from the previous week, with Interest rate-dependent refinances nearly the sole driver of the gains.
Applications to refinance a home loan rose 16% from the previous week, while those to purchase a home rose just 0.2% for the week,” the MBA said.
"Treasury yields plummeted again last week amid a worsening global financial maelstrom, and mortgage rates dropped as a result," said Michael Fratantoni, chief economist for the MBA, in a statement.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since April, 3.91%, from 3.97%, with points unchanged at 0.41 (including the origination fee) for 80% loan-to-value ratio loans, according to the MBA.
In addition, the average loan size on applications was the second highest in the history of the survey at $303,000, with the refinance loan size of $302,000 at its second highest level ever, the MBA reported.