Refinances surge 175% from a year ago, as mortgage rates remain at a 2-year low

By Aarthi Swaminathan

The average rate for a 30-year mortgage backed by the Federal Housing Administration fell to 5.99%, industry group says

The numbers: Applications for mortgages jumped to the highest level in over two years, as homeowners jumped on lower mortgage rates.

The 30-year rate remained at a two-year low, which prompted a wave of refinances. Mortgage applications jumped to the highest level since July 2022 as a result.

Activity was measured by the market composite index - a measure of mortgage application volume - which was up in the past week, according to the Mortgage Bankers Association on Wednesday.

The market index rose 11% to 296.1 for the week ending Sept. 20 from a week before. A year ago, the index stood at 189.6.

Key details: The purchase index - which measures mortgage applications for the purchase of a home - rose 1.4% from a week prior.

The refinance index rose by 20.3%. Refinancing activity was up 175% from the previous year.

The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 6.13% for the week ending Sept. 20. That's down from 6.15% a week before.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 6.47%, up from 6.41% a week prior.

The average rate for a 30-year mortgage backed by the Federal Housing Administration was 5.99%, down from 6.12% the previous week.

The 15-year was down to 5.47% from 5.42% a week ago.

The rate for adjustable-rate mortgages was up to 5.76% from 5.66%.

The big picture: Even with mortgage rates at a two-year low, home buyers continue to hold back. Inventory remains a challenge, and with home prices hitting a new record high, affordability is strained.

Some buyers may also be holding out for lower rates, as the 30-year is expected to dip further into 2025.

What the MBA said: "While the level of refinance activity is still modest compared to prior refi waves, they now account for the majority of applications, given the seasonal slowdown in purchase activity," Joel Kan, deputy chief economist at the MBA, said in a statement.

And "average loan sizes were higher both for purchase and refinance applications," Kan added, "which pushed the overall average loan size to its highest in the survey's history at $413,100."

-Aarthi Swaminathan

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09-25-24 0700ET

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