Mortgage refinance demand jumps

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Applications to refinance a home loan, which are most sensitive to weekly rate changes, jumped 16% week-over-week and were 59% higher than the same week one year ago, according to CNBC. Here’s what else the network reports:
  • Applications for a mortgage to purchase a home increased 1% week-over-week but were still 11% lower than the same week one year ago
  • Total mortgage application volume rose 6.9% week-over-week and reached its highest level since January
  • There are about less than 1 million borrowers who can benefit from a refinance at the current rate and shave at least 0.75% off their contract rate.
  • The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) is now 6.63%, up 0.29% from Monday

Our take
No surprise here. With mortgage interest rates dropping last week to their lowest level since May 2023, we expected a surge in mortgage demand from homebuyers and especially from current homeowners. Rates might not fall below the 6% threshold this month, but expect them to fall once the Fed cuts interest rates in September. And that’s just the start. We anticipate mortgage rates to drop throughout the rest of the year and into next year as well. Prepare your clients, specifically your potential buyers, for this opportunity.