US mortgage rates fall again, triggering big wave of refinancing

APPLICATIONS to refinance mortgages surged for a second week as more Americans capitalised on the cheapest borrowing costs in two years.

The Mortgage Bankers Association’s (MBA) refinancing index jumped 20.3 per cent in the week ended Sep 20 to the highest level since April 2022, the group said on Wednesday (Sep 25). The contract rate on a 30-year fixed mortgage eased two basis points to 6.13 per cent, the eighth straight weekly drop and the longest stretch of declines since 2018-2019.

That helped boost the group’s home-purchase applications index by 1.4 per cent last week to the highest level since early February. The fifth straight weekly advance in the measure points to burgeoning demand in a housing market that’s gradually finding some footing.

At the same time, home financing costs may start to stabilise. Yields on the 10-year Treasury note have edged higher in the last week as traders debate the magnitude of Federal Reserve’s expected interest-rate cut in November as well as the path for reductions.

The average contract rate on a 15-year mortgage and the five-year adjustable-rate mortgage ticked up last week after sharp declines in the prior two weeks.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG