A flash drop in mortgage rates ignited a mini-refinance boom.
Refinance Demand Jumped +9% w/w
As we’ve been writing over the past few weeks, refinance applications dropped dramatically from their all-time highs since interest rates gradually began climbing upwards.
Then, when the Russian invasion of Ukraine began two weeks ago, mortgage interest rates did an about-face and decreased to 4.09% from 4.15% while points remained unchanged at 0.44, according to the Mortgage Bankers Association.
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The result of that slight interest rate U-turn bumped refinance applications +9% last week compared to the previous week. Even with that bump, however, refinance application volume was half of what it was during the same week last year when interest rates were lower than 4.09%.
Interestingly enough, according to CNBC’s real estate report Diana Olick, this recent interest rate turnaround would have benefitted 5M homeowners choosing to refinance compared to 3M just two weeks prior to that slight dip.
Purchase Mortgage Applications Also Jumped +9% in Same Week
Applications for a mortgage to purchase a house also jumped +9% last week. Even though homebuyers are less sensitive to weekly interest rate moves than homeowners considering refinance options, slightly lower rates didn’t hurt.
Most industry experts attributed the increased volume of purchase mortgage applications to a slight uptick in housing supply hitting the market in time for the spring buying season.
Mortgage Rate Dip Fleeting
This current week, mortgage rates jumped right back up, according to Mortgage News Daily, with an uptick of 25 basis points in just two days.
Joel Kan, an economist with the Mortgage Bankers Association, said, “Mortgage rates dropped for the first time in 12 weeks, as the war in Ukraine spurred an investor flight to quality…Looking ahead, the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other.”
Mathew Graham, chief operating officer with Mortgage News Daily. said, “While the Ukraine situation does indeed drive demand for bonds, the associated inflation implications are simultaneously pushing demand away. The net effect was a move back up to the highest mortgage rates since early 2019.”
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Thanks to CNBC.