NEW YORK — Mortgage demand jumped sharply last week as borrowers looked to take advantage of lower interest rates that included a brief but steep rate drop following comments from President Donald Trump, according to industry data.
As the CU Daily reported, Trump said on social media last week that he would direct mortgage giants Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities in an effort to push rates lower. On that news, the average rate on a 30-year fixed mortgage briefly fell below 6% on Friday morning before edging higher, according to Mortgage News Daily.
Total mortgage application volume surged 28.5% last week from the prior week, which was adjusted for the holiday period, according to the seasonally adjusted index from the Mortgage Bankers Association.
‘Always a Noisy Time’
For the week, the MBA reported that the average contract rate on 30-year fixed-rate mortgages with conforming balances of $832,750 or less slipped to 6.18% from 6.25%. Points declined to 0.56 from 0.57, including the origination fee, for loans with a 20% down payment.
“Rates started to come down a little just before that, and part of it might be a bounce back from the holidays, even though we did adjust for the holiday in the results the week before. It’s always a noisy time,” Joel Kan, an economist with the Mortgage Bankers Association, said in a statement. “This was a real move based upon the rate drop. Spreads had been moving in even before the announcement.”
Refi’s Jump
According to the MBA, refinancing activity, which tends to be most sensitive to short-term rate changes, jumped 40% for the week and was 128% higher than the same period a year earlier.
“The average loan size for refinance applications was also higher, as borrowers with larger loan sizes are typically more sensitive to changes in rates,” Kan added in a statement.
Applications for mortgages to purchase homes, which are generally less reactive to sudden rate swings, rose 16% from the previous week and were 13% higher than a year earlier. The increase likely reflected buyers returning after the holidays, easing home prices and a modest rise in homes available for sale.
Mortgage rates moved higher at the start of this week, according to Mortgage News Daily, climbing Monday on expectations of higher oil prices and edging up again Tuesday.
