INDIANA – Homeowners rush to refinance their mortgages as borrowing costs tumble.
The average 30-year mortgage rate fell to its lowest level in more than a year, a welcome affordability boost for prospective home shoppers and homeowners looking to refinance their home loans to a lower rate. Mortgage buyer Freddie Mac said Thursday that the rate fell to 6.47% from 6.73% last week.
“Rates on both 30- and 15-year fixed-rate mortgages decreased for the second consecutive week, and combined with the previous week’s rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance,” MBA Chief Economist Joel Kan in a statement.
The dip spurred an influx of refinancing applications as borrowers sought to take advantage of the lower rates.
In 2023, the 30-year fixed-rate mortgage nearly hit 8 percent, slamming the brakes on the housing market.
The decline in mortgage rates could also be fueling greater optimism in real estate markets in general. Overall, applications soared around 17%, while purchase applications rose 3% from the week before, “with small gains seen across the various loan types, indicating that prospective homebuyers are slowly reentering the market,” Kan added.
Experts expect these trends to continue. Mortgage rates may be in the lower sixes by the end of this year, hitting the high five or mid-fives towards the end of next year.
Others say the mortgage dip may be an outsized reaction to a weak jobs report and the historic market sell-off from earlier this month.
“Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing,” Freddie Mac’s Chief Economist Sam Khater said in a statement.
