As a weary real estate industry casts its eyes on Wednesday’s Federal Reserve meeting, homebuyers aren’t waiting to enter the mortgage fray.
Purchase and refinance activity surged for the week ending on Sept. 13, according to the Mortgage Bankers Association’s weekly survey. Mortgage rates’ continued slide spurred the explosion in activity amid expectations of a Fed interest rate and rates dipping to a two-year low.
On a seasonally adjusted basis, purchase applications increased 5 percent from the previous week (the results for the week include a Labor Day adjustment). Unadjusted, the increase was 15 percent from the prior week, though activity was a hair lower than it was a year ago.
The change in refinancing activity was even more drastic as those stuck with a rate above 7 percent in recent years capitalized on falling rates. Refinancing rose 24 percent from the previous week and a staggering 127 percent year-over-year.
Market expectations around the first interest rate cut in years — which could be unveiled as soon as Wednesday — helped bring down mortgage rates substantially, according to MBA deputy chief economist Joel Kan. The average 30-year fixed rate mortgage clocked in at 6.15 percent last week, down a full percentage point from a year earlier and the lowest rate since September 2022.
“Homebuyers are seeing improving affordability conditions, sparked by lower rates and slower home-price growth,” Kan stated.
The refinance share of activity last week crossed over the midline, accounting for 51.2 percent of total applications. The FHA share of applications increased from 14.7 percent to 15.2 percent, while the VA share similarly rose from 16.4 percent to 16.8 percent; the USDA share stuck at 0.4 percent.
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The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances ($766,550 or less) decreased from 6.29 percent. The average rate for a 30-year fixed-rate mortgage with jumbo loan balances decreased from 6.56 percent to 6.41 percent. Meanwhile, the average contract interest rate for a 15-year fixed-rate mortgage dropped from 5.71 percent to 5.42 percent.