As borrowing costs plummet to their lowest point in two years, American homeowners are seizing the opportunity to refinance their mortgages, driving a surge in applications for the second consecutive week. The refinancing index, a key indicator of mortgage activity, soared 20.3% in the week ending September 20, reaching its highest level since April 2022, according to the Mortgage Bankers Association.
The average contract rate for a 30-year fixed mortgage dipped 2 basis points to 6.13%, marking the eighth consecutive weekly decline and the longest streak of decreases since 2018-2019. This downward trend has also boosted home-purchase applications, which rose 1.4% last week to their highest level since early February. The five-week streak of increases suggests a growing demand in the housing market, which is slowly regaining its footing.
However, there are signs that home financing costs may be stabilizing. Yields on the 10-year Treasury note have crept up in recent days, as investors speculate about the scope of the Federal Reserve’s expected interest-rate cut in November and the subsequent path for reductions. Meanwhile, the average contract rates for 15-year mortgages and five-year adjustable-rate mortgages edged upward last week, following sharp declines in the previous two weeks.
The Mortgage Bankers Association’s survey, which has been conducted weekly since 1990, aggregates responses from mortgage bankers, commercial banks, and thrifts, covering over 75% of all retail residential mortgage applications in the US.
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