For the first time in nearly two months, mortgage rates dropped below 3% last week, down seven basis points to 2.97%, according to Freddie Mac’s Primary Mortgage Market Survey.
“The drop in mortgage rates is good news for homeowners who are still looking to take advantage of the very low-rate environment,” said Sam Khater, Freddie Mac’s chief economist. “Freddie Mac research suggests that lower income and minority homeowners have been less likely to engage in the refinance market. Low and declining mortgage rates provide these homeowners the opportunity to reduce their monthly payment and improve their financial position.”
The Mortgage Bankers Association reported after six consecutive weeks of dips, mortgage applications rose 8.6%, with Joel Kan, MBA’s associate vice president of economic and industry forecasting, pointing directly to lower rates.
“Borrowers acted on the decrease in rates for most loan types, with both conventional and government refinance applications showing gains,” said Kan. “The spring housing market also saw a boost from lower rates, with purchase applications — driven by a jump in conventional applications — increasing over 5%.”
According to data from Black Knight, a near 10-basis-point drop in mortgage rates can reinstate millions of borrowers in to “high-quality refinance candidate” status. After rates fell to 3.04% the week prior, Black Knight found the number of high-quality refi candidates moved back up to 13 million — potentially putting $3.6 billion back in to homeowners’ pockets.
But consumers are going to need to act fast as rates are projected to rise during the rest of the year.
Fannie Mae’s economic and strategic research group estimates refinance origination volumes in 2022 will total $1.1 trillion, a 48% decline from 2021 and a $40 billion downward revision from last month’s forecast. On the flip side, the group is now expecting 2021 and 2022 purchase volumes for the overall mortgage market to total $1.9 trillion for each year, an upward revision of a whopping $66 billion and $84 billion, respectively, from the previous month’s forecast.