After a pretty rough month for mortgage rates, borrowers saw a sign of hope and pounced. A small dip in the 30-year fixed rate lit a fire under refinances.
After rising sharply over the previous two weeks, the average contract interest rate for 30-year fixed-rate mortgages decreased to 3.99% from 4.02%.
That pushed total mortgage application volume up 8% for the week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was 58% higher than a year ago, when refinances were incredibly weak. The rate reversal was enough to push refinance volume 14% higher for the week and 133% higher from one year ago. The gain may have been less about the tiny dip and more about borrowers seeing rates move higher in the previous weeks and worrying that they would miss out on the lowest rates. Lenders say they often see more refinance applications just as rates start to rise, because borrowers who had been waiting for rates to move even lower decide to get off the fence.
Mortgage applications to purchase a home rose just 1% for the week but were 10% higher annually. The fall housing market is benefiting from lower rates but suffering from a lack of homes for sale, especially at entry-level prices.
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