Current average fixed-rate mortgage rate for 30 years: 6.52%
Spread: 266 bps pic.twitter.com/h67ot0DcSm
— Lance Lambert (@NewsLambert) August 13, 2024
Last week, mortgage rates experienced a slight decrease, with the average interest rate for 30-year fixed mortgages dropping from 6.55% to 6.54%. This minor decline has sparked a noticeable increase in refinancing applications, which surged by 35% from the previous week and by 118% from the same week last year. In contrast, home purchase applications rose only 3% and remain 8% below where they were a year ago.
Homebuyers are still grappling with high property prices, limited availability, and elevated interest rates.
The whole housing sector is anxiously awaiting the Fed’s next move already – $HD pic.twitter.com/WxYVZXYxBp
— Rick Palacios Jr. (@RickPalaciosJr) August 13, 2024
According to Joel Kan, an economist with the MBA, “The refinance index also had its most robust week since May 2022, with strong gains seen in conventional, FHA, and VA applications.”
Informative housing insight from @conorsen. In July, builders we survey reduced the rate of single-family starts more than typical for the June to July period. Rates just began to decline in August, so we shall watch for shifts as the month progresses. https://t.co/X8xpJa43BK
— Rick Palacios Jr. (@RickPalaciosJr) August 12, 2024
The proportion of refinancing within mortgage applications increased to 48.6% from 41.7% the previous week, representing a significant rise from 29% a year earlier. Mortgage rates have started this week with little change, although the upcoming consumer price index release could affect rates.
The Mortgage Bankers Association’s refinancing index surged 34.5%, reaching a two-year peak of 889.3. Mortgage applications for purchasing a home rose by 2.8% in the week ending August 9, marking the largest increase since the early June period. https://t.co/l3Mc2TFX7t
— Scott Suttell (@ssuttell) August 14, 2024
Matthew Graham, COO of Mortgage News Daily, remarked, “It’s impossible to predict in advance whether CPI data will be beneficial or harmful — only that it has been responsible for some of the largest fluctuations over recent years.”
Forecasts indicate that borrowing rates against home equity, including both home equity loans and HELOCs, might lower in the autumn of 2024 as a result of the Federal Reserve considering rate cuts, with a potential reduction in September. Bill Westrom, CEO of Truth in Equity, predicts a decrease in the prime rate by 0.25% to 0.50% by year-end, asserting, “A modest decrease could provide us with a slight uplift and relief without contributing to inflation.”
Unless there’s an urgent need for funds, experts advise waiting for lower rates before borrowing.
Outlook for Mortgage Refinancing Surge
Debra Shultz, VP of lending at CrossCountry Mortgage’s The Shultz Group, states, “There’s no need to rush. Rates are on a downward trend, and these products will remain available.”
However, for those who require immediate cash and cannot wait, obtaining a loan now may be the best call.
John Aguirre, a mortgage broker at Loantown, suggests, “If you can meet your objectives with the current rate and payment structure, proceed now and eliminate any risks.”
Whether borrowers opt for a home equity loan or HELOC, it’s crucial to compare options from multiple lenders, examining rates, fees, terms, and repayment conditions to find the best fit for their financial goals. As of August 13, 2024, the average fixed rate for a 30-year mortgage stands at 6.59%, dropping by 0.10% from the previous week. The typical rate for a 15-year fixed mortgage is 5.99%, reducing by 0.15% compared to a week earlier.
These fluctuations in mortgage rates arise as the economy braces for the release of additional inflation data. With the potential for declining inflation, the Federal Reserve is preparing to enact its first interest rate cut of the year, which is likely to result in lower mortgage rates soon. To achieve the best mortgage rates, experts encourage saving for a larger down payment, enhancing credit scores, reducing debt, and investigating different loan options and assistance programs.
While challenges persist in the housing market, the prospect of declining mortgage rates offers hope to future homebuyers.
