“Although this week’s decline was slight, the 30-year fixed-rate mortgage trended down to its lowest level in two years,” Freddie Mac chief economist Sam Khater said in the PMMS report. “Given the downward trajectory of rates, refinance activity continues to pick up, creating opportunities for many homeowners to trim their monthly mortgage payment.”
Khater also observed that many looking to purchase a home are playing the waiting game, hoping for further rate reductions as new economic data is released over the next several weeks.
The drop in rates has led to a notable uptick in mortgage application activity, according to the Mortgage Bankers Association (MBA). Overall mortgage applications rose by 11% from the previous week, driven by a surge in refinance applications, which spiked 20%. This continues a trend from the prior week.
MBA deputy chief economist Joel Kan explained the impact of the rate decline, which has led to increases in both conventional and government-backed refinance applications.
“The refinance share of applications is now at 55.7%, and 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,” Kan said.