Mortgage rates decrease, but so do applications
Total mortgage applications slipped 1.2% in the week ending Dec. 4, the Mortgage Bankers Association (MBA) reported on Wednesday.
Meanwhile, rates on 30-year fixed-rate mortgages dropped to a record-low average of 2.90% in the mortgage bankers’ weekly survey, from 2.92% the previous week.
Demand for refinance loans grew 2% and accounted for 72% of total mortgage applications, a big jump from 69.5% the previous week.
Homeowners have been most interested in refinancing government-insured loans, says Joel Kan, the MBA’s forecaster.
"The increase in refinance applications was driven by FHA and VA refinances, while conventional activity fell slightly. The ongoing refinance wave has continued through the fall, with activity last week up 89% from a year ago," Kan says.
But applications for new mortgages — called "purchase loans" — decreased 5% last week, with the high demand for loans hampering some borrowers from scoring today’s dirt-cheap rates.
Shopping around is crucial
The lowest mortgage rates can be elusive because rates "are taking a majority of their day-to-day cues from lender capacity,” explains Matthew Graham, chief operating officer of Mortgage News Daily.
“Lenders raise rates (or simply abstain from dropping rates) when they're as busy as they want to be, and they drop rates very gradually when they are ready to handle more business,” Graham writes.
Mortgage News Daily’s own survey of lenders shows mortgage rates dropping to a new low, with 30-year loans averaging an unprecedented 2.80% on Tuesday. Still, borrowers should prepare to do some digging to land a rock-bottom rate.
Experts recommend comparing a minimum of five rate quotes to find the best mortgage offer you can get. Studies have found you can save thousands of dollars by getting at least five mortgage offers.
It also helps to have a solid credit score.
If you wait too long and miss out on the lowest mortgage rates ever, you can still find other ways to save. Use your comparison shopping skills when you buy or renew your homeowners insurance, too. Get quotes from several insurers and review them side by side, to find the lowest price for your coverage.