Homeowners took an opportunity to refinance their home loans after a sudden and uncertain decline in mortgage rates to reduce their monthly payments.
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Mortgage Bankers Association’s Weekly Index recorded a 20% rise in applications to refinance home loans.
The average contract interest rate for 30-year fixed rate mortgages with loan balances of around $548,250 or lower dropped to 3.09% from 3.15%.
Joel Kan, VP of Economic and Industry Forecasting noted that treasury yields have dropped over the past month as investors remain uncertain about the Covid-19 variant and declining economic growth.
Refinance demand was still at 29% lower than the same week in 2020. Lenders are starting to loosen their rates, given the slower applications for home loans.
Mortgage applications to buy a home rose by 8% for the week, but dropped 29% than one year ago.
The supply of homes for sales is starting to rise. Some buyers will return to the market after being pushed out by huge competition over the last year.