Haven't Refinanced Your Mortgage Yet? You're Missing the Boom

Other very influential interest rates already are hitting their highest levels since before the pandemic.

Overall mortgage demand declines

Mortgage applications fell 4.1% in the week ending Feb. 5, the Mortgage Bankers Association, or MBA, reported on Wednesday.

Refinance requests declined 4% from a week earlier but were up a solid 46% compared to the same week in 2020. Refinances accounted for 70.2% of all mortgage applications last week.

"Demand for refinances is still very strong this winter," says Joel Kan, the MBA's forecaster.

Applications for new, homebuyer mortgages — called "purchase loans" — dropped 5% last week but were 17% higher versus a year ago.

The trade group suggests rising mortgage rates are dragging down mortgage applications. In the MBA's weekly survey of lenders, the average rate for a 30-year fixed-rate mortgage jumped last week to 2.96%, the highest since November.

But rates look much more attractive in other surveys. Mortgage News Daily on Tuesday pegged 30-year rates at an average 2.83%, down from 2.85% on Monday.

More: Mortgage payoff calculator

The risk of rising rates

Still, the rates on home loans appear likely to head higher. Mortgage giant Freddie Mac is predicting that 30-year fixed mortgage rates will average close to 3% throughout 2021.

Rates tend to follow the interest on Treasury bonds, and bond yields have been climbing. Earlier this week, the yield on the benchmark 10-year Treasury note was the highest since early 2020, and the 30-year Treasury yield popped above 2% for the first time since the coronavirus crisis began.