April 28th, 2019 8:25 AM by Jackie A. Graves, President
week’s massive dip in mortgage rates apparently pushed homeowners into action.
According to new data from the Mortgage Bankers Association, refinancing was up
39% last week, hitting its highest point since January 2016.
Overall refinances accounted for nearly half of all mortgage
applications: 47.4%, specifically. For mortgage lender Better.com, the refi
surge was even bigger. The company saw refinance loans make up 56% of its total
loan activity last month. In total, Better.com has seen a 500% increase in
refinance applications since March 2018.
Last week’s dip into low-4% mortgage rates is the big driver of
this uptick in activity. According to Freddie Mac, the average rate on a
30-year fixed-rate loan as of March 28 was 4.06%. On 15-year fixed loans, it
As Sathi Roy, Better.com’s
head of refinance explains, “In the
mortgage landscape, rates are king, and what we’re now seeing is that anyone
who has thought about refinancing in the past year is now taking action on it.”
But rates are only the starting point. According to Roy,
“learning from the mistakes of 10 years ago” is also what’s at work, with many
experts saying a recession is looming. “People are trying to get ahead of what
we experienced in 2008,” Roy said. “People are now starting to understand the
importance of home equity and that a mortgage isn’t just a mortgage.”
Other major drivers of refinancing include divorce, the desire
to tap into home equity for renovations or just the hot spring
“We see a spike in refinancing in the springtime, which is the
busiest homebuying season,” Roy said. “Some people tap into equity of their
house to buy a second house. Why save $100,000 when you’re already living in
About the Urgency
But refinancing wasn’t
the only area to see a jump last week. According to the MBA, purchase loans
were also up for the week. Total purchase activity was up 3% over the previous
week and 10% over the year.
According to Joel Kan, associate vice president of economic and
industry forecasting at MBA, "There
was a tremendous surge in overall applications activity, as mortgage rates fell
for the fourth week in a row—with rates for some loan types reaching their
lowest levels since January 2018.”
Another notable stat?
Average loan size on those purchase applications was down. And according to
Kan, that’s a sign.
"The average loan size for purchase loans declined
slightly, as applications for smaller purchase loan sizes exceeded that of
higher loan sizes—a positive sign that first-time buyers were increasingly
active in the market,” Kan said.
Still, despite this slight uptick in buying activity, Roy says
the real urgency is for refinancers.
“The rate environment is tied to many different things,
including the global economy, so although I cannot say with 100% certainty that
rates will continue on this trend," Roy said. "What I can say is that
the cost of waiting is higher than the cost to put yourself in a better
position. Now is the time to refinance.”
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