Key Takeaways
- Mortgage demand rose last week, with the number of applications reaching its highest level since January 2023.
- Refinancing drove the gains, increasing 35% over last week and hitting levels not seen since May 2022.
- Mortgage rates were little changed from the prior week, with the average interest rate on a 30-year fixed mortgage inching down to 6.54%, but are down from around 7% in early July.
Mortgage demand last week reached its highest level since January 2023 as homeowners continued to take advantage of a decline in mortgage rates to refinance their home loans.
Mortgage applications increased 16.8% in the week ending Aug. 9, driven by refinancing demand, according to data from the Mortgage Bankers Association (MBA). Mortgage rates didn’t decline as much as in the week prior, with the average interest rate on 30-year fixed-rate mortgages inching lower to 6.54%, but the rate is down from around 7% in early July.
The data indicated homeowners with high rates sought to lower their borrowing costs. Refinancing jumped 35% over the prior week, pushing it to its highest since May 2022. Refinancing activity is more than double what it was at the same time last year, the MBA found.
“We’ve been at such a low level for so long that even these little blips in refinancing have caused some pretty sizable percent changes,” Kan said.
Relief for High-Rate Borrowers
Mortgage rates are near their lowest levels in more than a year, but they were still higher than at any point between 2009 and 2021. However, after facing near-7% interest for more than a year, many homeowners are pouncing on lower mortgage rates, said Joel Kan, MBA vice president and deputy chief economist.
“A lot of these are a lot of more recent loan issuances that originated in 2023 or early 2024 that are now getting into the money, even though they only have about a half percentage point rate drop,” Kan said.
Rates were also good enough last week to increase the volume of applications for home purchases. Kan said the data shows home buyers are slowly reentering the market after high borrowing costs depressed home sales in recent months.