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MBA: Refinances skyrocket as mortgage rates plummet

The Refinance Index climbs to highest level since July 2016

Mortgage applications rose a whopping 21.7% from last week, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 9, 2019.

According to the MBA, on an unadjusted basis, the index climbed 21.7% from the previous week.

“The 2019 refinance wave continued, as homeowners last week responded to extraordinarily low mortgage rates. Fears of an escalating trade war, combined with economic and geopolitical concerns, once again pulled U.S. Treasury rates lower,” MBA Vice President of Economic and Industry Forecasting Joel Kan said. “The 30-year fixed mortgage rate decreased eight basis points to 3.93% – the lowest level since November 2016 – and has now dropped more than 80 basis points this year.”

“In just the last two weeks, rates have decreased 15 basis points and the refinance index has increased more than 50%, reaching its highest level since July 2016,” Kan said. “The government refinance index, driven by a 25% increase in VA refinance applications, is now at its highest level since May 2013.”

The Refinance Index moved forward 37% from the previous week to its highest level since July 2016. As of now, the refinance index sits 196% higher than the same time period in 2018.

The unadjusted Purchase Index grew 1% from a week ago but remained 12% higher than the same week a year ago. The seasonally adjusted Purchase Index increased 2% from the week before.

Here's a more detailed breakdown of this week's mortgage application data:

  • The refinance share of mortgage activity increased to 61.4% from last week’s 53.9%.
  • The adjustable-rate mortgage share of activity increased to 6% of total applications.
  • The Federal Housing Administration's share of mortgage apps retreated to 9.5% from last week’s 11%.
  • The Department of Veterans Affairs' share of applications moved backward to 12.2% from last week’s 12.8%.
  • The Department of Agriculture's share of total applications fell from last week’s 0.6% to 0.5%.
  • Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased from last week’s rate of 4.01 to 3.93%. The rate sits at its lowest level since November 2016.
  • The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) fell to 3.88% from last week’s 3.96%. This week’s rate is the lowest recording since November 2016.
  • The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA declined to 3.81% from last week’s 3.86%. This rate is now the lowest it has been since November 2016.
  • The average contract interest rate for 15-year fixed-rate mortgages declined from last week’s 3.37 to 3.28%. This rate marks the lowest level since November 2016.
  • The average contract interest rate for 5/1 ARMs slightly increased to 3.43% from last week’s 3.36%.

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