[ad_1]
Homeowners moved to refinance their homes in substantial numbers for the week ending June 7 after a slight decline in borrowing costs, the Mortgage Bankers Association (MBA) revealed on Wednesday, pushing up new applications for mortgages to their highest levels in weeks.
Read more: How Much Equity Do You Need for A Mortgage Refinance?
MBA’s Refinance Index soared 28 percent for the week and was up 28 percent from a year ago. Meanwhile, the Purchase Index, which tracks new mortgage applications, also rose 19 percent compared to the prior week, though it was down 12 percent from the same time last year.
The increase in activity came on the back of a small decline in borrowing costs for home loans. The 30-year fixed rate mortgage came in at 7.02 percent from the prior week’s 7.07, the MBA said, a signal at how sensitive the housing market is to even the slightest movement in the cost of home loans.
A home for sale on May 22 in Austin, Texas. Mortgage applications jumped for the week ending June 7, lenders said.
A home for sale on May 22 in Austin, Texas. Mortgage applications jumped for the week ending June 7, lenders said.
Brandon Bell/Getty Images
“Lower rates earlier in the week meant a strong increase in refinance activity, particularly for [Veterans Affairs] borrowers, who jumped on the chance to lower their rates. Overall refinance activity was more than 27 percent above one year ago,” Mike Fratantoni, MBA’s chief economist, said in a statement shared with Newsweek.
Read more: Step-by-Step Guide on How to Qualify for a Mortgage
“On a seasonally adjusted basis and compared to the holiday-adjusted level from the prior week, purchase activity also increased,” he added.
For buyers out looking to purchase, they are seeing more options available as supply of homes looks to have improved.
“Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time,” Fratantoni said. “This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market.”
The housing market has been grappling with elevated borrowing costs that are at their highest in more than two decades, a reality that has dissuaded buyers from purchasing homes. Meanwhile, a lack of enough homes for sale has contributed to a rise in prices to record levels.
The drop in rates for the week ending on June 7 spurred homeowners to secure relatively cheaper home loans at a larger share than in previous weeks. The VA segment of the market in particular, which contributed a significant chunk of the refinancing activity, improved to nearly 15 percent for the week compared to about 12 percent in the prior week.
“The refinance share of mortgage activity increased to 35.2 percent of total applications from 31.1 percent the previous week,” the MBA said in its statement.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
[ad_2]
This article was originally published by a www.newsweek.com . Read the Original article here. .