Mortgage Rates Decline, Refinances Surge: Opportunities for Homeowners and Buyers
Mortgage rates declined one basis point last week according to the Freddie Mac Primary Mortgage Market Survey released September 26th. Although this week’s decline was slight, given the downward trajectory of rates, refinance activity continues to pick up, creating opportunities for many homeowners to trim their monthly mortgage payment. Meanwhile, many looking to purchase a home are playing the waiting game to see if rates decrease further as additional economic data is released over the next several weeks.
Mortgage applications increased 11.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 20, 2024. “Mortgage applications increased to their highest level since July 2022, boosted by a 20 percent increase in refinance applications after a large increase the prior week. The 30-year fixed rate decreased for the eighth straight week.” according to Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As a result of lower rates, week-over-week gains for both conventional and government refinance applications increased sharply. The refinance share of applications is now at 55.7 percent.”
Sales of new U.S. single-family homes fell less than expected in August and could regain momentum in the months ahead as declining mortgage rates and house prices stimulate demand. The report from the Commerce Department on Wednesday also showed new home sales were higher than previously estimated in the prior three months. Mortgage rates have dropped to the lowest level in more than 1-1/2 years and previously owned homes remain in short supply on the market. “We expect lower mortgage rates, pent-up demand and a still relatively scarce supply of existing homes despite some recent increases to support modest growth in new home sales over the balance of 2024 and into 2025,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.
The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week, suggesting that the labor market remained healthy. The upbeat outlook on the economy was underscored by other data on Thursday showing corporate profits increased at a more robust pace than initially thought in the second quarter. Strong profit growth should help to underpin the labor market and investment. The economy’s resilience could make it harder for the Federal Reserve to deliver another 50 basis points interest rate cut in November as some investors are hoping. “The economy remains strong and the need for additional large rate cuts are questionable if the economy continues to move forward at a brisk pace,” said Christopher Rupkey, chief economist at FWDBONDS.
