Consumers jumped on lower mortgage rates last week as expectations for a Federal Reserve interest rate cut percolate.
Home loan applications shot up 14.2% for the week ending Sept. 13
The Refinance Index also rose 24% week-over-week and was 127% greater than it was the same time a year ago. That spike was apparent over the past two weeks at Pennsylvania State Employees Credit Union, said Jose Pascual, head of mortgage and consumer banking. The Harrisburg, Pennsylvania-based lender normally sees refinances account for 10% to 12% of activity, but that share jumped to around 24% early this month.
"Quite a few members and borrowers out there have loans with rates over 7%," he said. "Rates are starting to get attractive for them."
Rate drops this summer have
Joel Kan, vice president and deputy chief economist at the MBA, also highlighted an increase in conventional purchase applications to a pace ahead of last year. The MBA's seasonally adjusted purchase index was up 5% weekly. On an unadjusted basis, it climbed 15% but was down 0.4% year-over-year.
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"Homebuyers are seeing improving affordability conditions, sparked by lower rates and slower home-price growth," Kan said in a press release.
The MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances falling to 6.15%, a two-year low. A year ago, that rate was
Consumers have applied for even more government-backed loans, with Federal Housing Administration activity rising from 14.7% to 15.2% last week. The average contract interest rate for 30-year fixed-rate FHA mortgages dropped to 6.12%, with points climbing slightly to 0.81, according to the MBA.
Department of Veterans Affairs-backed mortgage applications rose to 16.8% ending Sept. 13, from 16.4% the week prior. U.S. Department of Agriculture-sponsored home loan activity was unchanged, accounting for 0.4% of all applications.
Effective rates for other products fell across the board, with 15-year fixed-rate mortgages averaging 5.42% last week, down from 5.71% a week earlier. Points dipped to 0.70 from 0.73.
Applicants for 5/1 ARMs also enjoyed a 19 basis point rate drop from the start of the month to 5.66%. Points went up to 0.49 from 0.29.
Jumbo borrowers saw average contract interest rates for 30-year fixed-rate mortgages fall to 6.41%, from 6.56% a week earlier. Points increased to 0.55 from 0.33 over the same time.
Experts are
