Mortgage Refinancing Applications Surge as Rates Hit New Historic Low

: Chris Lee Law Firm

  Filed under: Refinancing

Mortgage Refinance ApplicationAfter weeks of surprisingly low application numbers, U.S. mortgage refinancing applications surged last week as rates hit a new all-time low borrowing cost. In fact, according to the Mortgage Bankers Association, mortgage applications increased by 9.3 percent from the previous week, with refinancing requests increasing a whole 11.2 percent. This is the third consecutive weekly increase in refinancing activity, and the highest number since August.

Low Rates Not Expected to Last

Mortgage rates dropped last week, largely in response to the announcement by the Federal Reserve that their portfolio would be shifting more toward long-term Treasury Securities, and that they would resume the purchasing of mortgage-backed securities. However, experts say this surge in activity may be short-lived.

The volatile environment surrounding market interest rates makes predictions of long-term low rates unreliable. Already, experts have noticed that, since last week, interest rates have risen considerably, reversing signs of last week’s decline. In fact, Fannie Mae mortgage bonds rose from 2.74 percent up to 3.10 percent and are expected to rise further to hover above 4 percent.

Thus, mortgage refinancing is not expected to give the same windfall effect seen during previous crises and periods of low mortgage rates. However, this may also be attributed to the current environment of falling home values that surrounds this low-rate period. Analysts from Deutsche Bank note that the effects of low mortgage rates have been completely overwhelmed by the overabundance of distressed properties, the availability of financing, and a number of other similar factors.

 


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