By Mike Colpitts
Mortgage rates hit another record low last week, spurring a huge surge in home refinancing as homeowners sought out the lowest loan payments possible. The Mortgage Bankers market composite index jumped 16.9% on a seasonally adjusted basis.
Refinancing surged 22% from the prior week and is at the highest level since last June. The refinance share of U.S. mortgage activity increased to make up 80.1% of all home loan applications, up from 77% thee weeks before. Purchase loan applications rose only one-tenth of one percent.
Rates hit the lowest level in U.S. history last week as 30-year fixed rate mortgages with conforming loan balances of less than $417,500 fell to 3.74%, a five basis point drop from the prior week on fully contracted loan agreements.
“Refinance application volume increased last week to near peak levels for the year as mortgage rates dropped,” said Mortgage Bankers economist Michael Fratantoni. “Applications for Home Affordable Refinance Program refinance loans accounted for 24% of refinance activity last week, in line with the HARP share for the past few weeks.”
In June, the number of refinance applications increased the most in the West South Central region, with a gain 63.7% in refinance applications. Refinances increased the least in the Pacific region, 30.9%.
The average fully contracted mortgage rate for 15-year fixed-rate loans declined to 3.12%, the lowest rate in the history of the survey, from 3.15% a week earlier. The average rate for 5/1 adjustable-rate mortgages remained unchanged at 2.71% on fully executed contracts.