Mortgage refinance applications rise as rates hit two-year low

Applications for mortgage refinancing jumped 20.3% over the past week, reaching its highest level since April 2022, reported the Mortgage Bankers Association (MBA) on Wednesday. The surge reflects more Americans taking advantage of the lowest borrowing costs in two years.

Federally insured mortgage rates dropped below 6%, while the 30-year fixed-rate mortgage slid to 6.13%, marking eight weeks of steady decline. The MBA survey includes over 75% of mortgage applications in the US.

The hike is mainly attributed to the Federal Reserve’s interest rate cut on September 18.

The decline in mortgage rates contributed to a 1.4% increase in home-purchase applications, the highest since early February.

However, home financing costs might stabilize soon as yields on the 10-year Treasury note have started to rise.

Furthermore, existing home sales, a key indicator of overall economic strength (which make up most of the housing market), fell 4.2% in August, according to the National Association of Realtors (NAR).

The inventory of affordable houses for sale remains lower than normal, and the average cost of existing homes rose 3.1% from 2023 to $416,700 last month.