Mortgage refinance activity surged last week as interest rates continued to ease, offering potential savings for current homeowners.
According to the Mortgage Bankers Association (MBA), applications to refinance a home loan rose 7% compared with the previous week and were 40% higher than the same period last year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) fell to 6.79% from 6.88%, marking the lowest level since April. The decrease in rates prompted more homeowners—particularly those with larger loan balances—to act quickly. The average refinance loan amount rose to $313,700, after remaining under $300,000 for the previous six weeks.
“This decline prompted an increase in refinance applications, driven by a 10 percent increase in conventional applications and a 22 percent increase in VA refinance applications,” said Joel Kan, MBA’s vice president and deputy chief economist.
While refinancing demand accelerated, purchase activity remained relatively flat. Applications for a mortgage to buy a home rose just 0.1% week-over-week, though they were 16% higher than a year ago.
“Purchase activity was essentially flat over the week, as overall uncertainty continues to hold homebuyers out of the market,” Kan noted.
Mortgage rates continued to drift lower into the start of this week, based on daily data from Mortgage News Daily, before stabilizing following the release of job openings data that came in stronger than expected. Typically, stronger labor data puts upward pressure on interest rates.
Broader economic signals, such as Thursday’s upcoming employment report, could introduce more volatility into mortgage markets. In the meantime, 15-year fixed mortgage rates also declined last week to 6.06%, extending a four-week downward trend.
Despite signs of improved affordability, the housing market remains challenged by high borrowing costs and ongoing concerns about home prices. While more property listings are appearing in some regions, overall market activity remains subdued.
