By Kevin Chiu
Refinancing home mortgages rebounded higher following a drop in mortgage interest rates last week, according to the Mortgage Bankers Association. The move came after rates on conventional loans dropped for the first time in a month.
The rate on a fully executed 30-year fixed mortgage declined to 4.76% from 4.80 the prior week, the bankers’ survey which accounts for about half of all mortgage activity in the U.S. indicated. Rates on 15-year fixed loans also dropped, drawing homeowners who are shopping to refinance mortgages back to the market. It was the lowest 30-year fixed rate contracts have been since last December.
The rate on a 15-year fixed rate mortgage also dropped to 3.96% from 4.03% with 0.82 points on a fully executed loan.
Industry studies have indicated that most homeowners who were able to refinance mortgages have already done so at lower interest rates. But the drop in rates accompanied by an increase in refinancing indicates that more homeowners are still looking to refinance. Lower home prices in most areas of the U.S. are making it difficult if not impossible for many mortgage holders to refinance their home loans.
The refinance share of the market increased to 62.7% of all mortgage activity. The adjustable rate share also increased slightly to 6.7% of applications for the week as homeowners who are hunting for the best interest rates to refinance finally lock-in rates.
Pent up buyer activity could also drive an increase in new home mortgage activity as prospective home buyers turn out to shop for homes at lower prices as spring time delivers better weather conditions in much of the country. The unadjusted purchase price index rose a slight 1.1% for the week, but was still 36.9% lower than the same week a year ago when government backed tax credits were still in effect for home buyers.