Rates rise, but so do refinances
Overall mortgage applications slipped 0.6% in the week ending Oct. 16, the Mortgage Bankers Association (MBA) reported Wednesday. But demand for refi loans grew by 0.2%, accounting for 66.1% of total mortgage applications, up from 65.6% during the previous week.
Requests for refinances are roaring compared to last year, with refi applications up a stunning 74% compared to the same week in 2019.
Mortgage rates also rose slightly, according to the MBA’s weekly survey, and reached their highest levels since late September. Rates on a 30-year loan rose to an average 3.02%, from 3% last week.
“If the highest rates in nearly a month sound scary, don't freak out just yet,” says Matthew Graham, chief operating officer of Mortgage News Daily, whose survey of lenders also finds average rates are up to levels not seen since late in September.
But Graham adds that many lenders are still quoting rates near their recent lows.
“The lift-off hasn't proven to be too alarming just yet,“ Graham writes.
Experts say rates are likely to remain fairly steady due to big, unanswered questions — over the election and whether Congress will pass another economic aid bill.
Time may be running out on lowest rates
Applications for new mortgages — called “purchase loans” — decreased by 2% from the previous week, with both conventional and government purchase activity taking a step back.
But those applications also remain robust compared to a year ago, partly thanks to the ongoing recovery in the housing market. Demand for purchase loans is up 26% from this time last year, the MBA says.
Though mortgage rates have stayed consistently low and have helped boost borrowing, a new refinance fee that formally takes effect Dec. 1 could change all that.
Freddie Mac and Fannie Mae — government-sponsored mortgage giants that buy most U.S. home loans from lenders — say they need the fee to cover some of their losses from the COVID-19 pandemic.
A good refi candidates — with a solid credit score and at least 20% home equity — may need to hurry to lock in one of the best rates while they're still available.
The mortgage data firm Black Knight recently calculated that 19.3 million mortgage holders were in a good position to refinance at a much lower rate and save $299 a month, on average.
Compare a minimum of five rate quotes to find the lowest rate possible for someone in your area and with your credit profile. Multiple studies have found you can save thousands of dollars by getting at least five mortgage offers.
If you’ve already refinanced your mortgage, you may not be done saving money. You can use your comparison shopping skills to get homeowners insurance at the lowest possible rate.