U.S. homeowners are choosing to refinance their current mortgages in record numbers, the most in more than three years, according to data from the Mortgage Bankers Association’s survey for the week ending August 16, 2019.
The seasonally adjusted index on mortgage refinancing activity edged up 0.4% to 2,754.7, the highest since July 2016. The refinancing portion of total applications grew to 62.7%, the largest rise since September 2016, from 61.4% a week earlier.
At the same time, new home mortgage applications decreased 0.9% from one week earlier, according to the MBA’s weekly application survey, for the week ending August 16. On an adjusted basis, the Market Composite Index decreased by 2% compared with the previous week.
The Refinance Index increased 0.4% from the previous week and was 180% higher than the same week one year ago. The unadjusted Purchase Index decreased 5% compared with the previous week and was 5% higher than the same week one year ago.
“The small moves in rates and refinancing are potential signs that lenders may be approaching capacity constraints as they continue to deal with the largest wave of refinance activity in three years,” said Joel Kan, the Mortgage Bankers Association’s associate vice president of economic and industry forecasting.
“Lower mortgage rates have yet to lead to a notable rise in homebuyer demand. Purchase applications fell more than 3%, but were still 5% higher than a year ago,” said Kan.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 3.90% from 3.93%, with points remaining unchanged at 0.24 (including the origination fee) for 80% LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.30% from 3.28%, with points decreasing to 0.33 from 0.34 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.