Refinance activity jumps due to lower rates
Posted on Wednesday, October 22, 2014 at 9:16:28 AM
The numbers are in: Refinance activity across the country has spiked, thanks to lower residential financing rates, with many homeowners champing at the bit to lock in more favorable terms for their mortgages.
According to the Mortgage Bankers Association, residential financing applications climbed 11.6 percent on a weekly basis for the seven-day period ending Oct. 17. Refinance activity ticked up 23 percent during that time, while the refinance share of total mortgage applications hit 65 percent - the highest it has been since December 2013.
"Mortgage rates have fallen close to 30 basis points over the last four weeks," explained Mike Fratantoni, chief economist for the MBA. "Refinance application volume reached the highest level since November 2013 as a result, and the average loan balance for refinance applications increased to $306,400, the highest level in the survey's history."
All this excitement has taken its toll on the financial services sector. Lenders are seeing a flurry of activity, as countless clients want to adjust their payments before rates begin to increase, according to Bloomberg.
"This is bizarro world," Anthony Sanders, an economics professor at George Mason University, told the media outlet. "Usually we associate lower interest rates with lower volatility. Now you're seeing the opposite."