"Concerns about the Chinese economy pushed interest rates down last week, resulting in a two basis point decline in 30 year fixed interest rate, bringing the rate down to its lowest since May 2015," Lynn Fisher, MBA's vice president of research and economics said in a release. "The pick-up in refinance activity was led by larger loan sizes on average, as continued investor interest drove jumbo interest rates down even further, by five basis points."
The refinance market share increased to 55.5% for the week ending August 14, according to the Mortgage Bankers Association’s most recent survey. It’s a significant increase, week-over-week, over the prior mark of 53.1%.
It’s not an unexpected trend, with mortgage originators predicting Americans will continue to refinance while rates are low.
“Buyers need to have a reason to refinance and these low rates are reason enough,” Paul Deschaine of Maine Home Mortgage told Mortgage Professional America, noting that choosing to refinance is a much-less cumbersome process compared to selling or buying a house.
Conversely, the level of refis are also more immediately influenced by a rise in rates, with homeowners quicker to hold off on those transactions.
However, following last week’s uptick in refis, one player argued that segment of business may currently be at its peak.
“I wouldn’t expect refinances to be too strong in the future,” Ron Bowden of Associated Bank told Mortgage Professionals America at the time. “When rates go up there will more-than-likely be declines in refinances.”
New origination business, meanwhile, continues to benefit from low rates as well. Mortgage loan application volume increased 3.6% week-over-week.
And rates continue to fall.
The average contract for 30-year fixed-rate mortgage with jumbo balances decreased to 4.03%. FHA
-backed 30-year fixed rates fell to 3.94%.
Refinances continue to gobble up a larger share of the market as rates continue to fall.