Last week finally ended the three week decline streak for mortgage applications as interest rates remained slightly below the 5% mark. New homebuyers and homeowners that are not underwater seem to be taking advantage of these great rates.
According to a press release today from the Mortgage Bankers Association (MBA), for the week ending Feb. 26 the seasonally adjusted rate for mortgage application’s increased 14.6% from the previous week. For the unadjusted Index, the amount increased 15.5% compared to the week prior.
“Mortgage applications rebounded last week, particularly refis, as rates dropped back below 5 percent,” Michael Fratantoni, VP of Research and Economics at MBA, said in a statement. “Purchase activity remains subdued, with application volumes remaining within the narrow range seen in the last few months.”
While the number of purchase application’s rose only 9% last week, the amount of filings for a refinance on an existing mortgage rose an astonishing 17.2% as the national average interest rate for a 30yr fixed loan stayed slightly below 5%. The number of requests for a refinance accounted for 69% of all applications this past week.
But even with mortgage interest rates at record lows not everyone with an existing loan will be able to achieve a low rate through a refinance. The reason why is because about one fourth of all residential mortgages holders owe more on their mortgage than their home is worth and because of this it will make it nearly impossible for many individuals to achieve this. So even with the major increase in refinance applications it is very unlikely for most of these borrowers to secure financing because of this.