Smart Borrower Blog

Low Rates Push Mortgage Applications Higher


Sep 14th, 2017 @ 8:57 AM by Amber Nelson


Long-term mortgage rates stabilized at their year-to-date low this week, prompting U.S. borrowers to refinance their home loans again, according to recent industry reports.

During the week ended September 14, 2017, the average rate on a 30-year fixed rate mortgage was unchanged from the week before, resting at 3.78 percent with an average 0.5 point, according to mortgage giant Freddie Mac. Last year at this time, the average rate was just 3.50 percent.

Rates on 15-year fixed rate loans also held steady at 3.08 percent with an average 0.5 point, but up from 2.77 percent a year ago.

“Following a sharp decline last week, the 10-year Treasury yield rose 11 basis points this week. The 30-year mortgage rate, however, remained unchanged at 3.78 percent,” said Freddie Mac chief economist Sean Becketti. “If Treasury yields continue to rise, mortgage rates could see an increase in next week’s survey.”

With interest rates near their 2017-lows, refinance activity has seen a big increase. The Mortgage Bankers Association saw an 9 percent jump in its refinance application index during the past week. Refinance requests made up 51.0 percent of total applications, up slightly from 50.9 percent the week before.

Homebuyers also want in on the low rate action. The MBA’s home purchase application index rose 11 percent in the latest week, which meant home purchase mortgage requests were also up 7 percent from the previous year.

Looser credit has helped as well. The MBA reported in a separate survey that available mortgage credit increased in August, with its index climbing 0.7 percent to 180.2. A rise in its index means lending standards are loosening, while a decrease indicates a tightening in credit requirements. The index was benchmarked to 100 in March 2012.

“Mortgage credit availability increased slightly in August, driven by the expansion of credit among conforming and agency jumbo programs,” said Lynn Fisher, MBA’s Vice President of Research and Economics. “Following the same pattern as last month, agency eligible adjustable rate mortgage loan programs continued to be updated in August to allow for higher loan to value ratios, effectively increasing the availability of credit.”

All the data together suggests that home buying and refinancing may be slightly easier for borrowers in the coming months.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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