US mortgage rates post biggest drop in a year, spurring refinance rush
Borrowing costs have been trending lower for months, and took another leg down after a disappointing jobs report on Friday
[BOSTON] Mortgage rates in the US fell by the most in a year, fuelling a surge in refinancing demand from homeowners looking to save money.
The average for 30-year, fixed loans was 6.35 per cent, down from 6.5 per cent last week, Freddie Mac said in a statement.
Borrowing costs have been trending lower for months, and took another leg down after a recent disappointing jobs report increased the likelihood of more rate cuts from the US Federal Reserve.
By Monday, consumers were able to lock in 30-year rates at 6.27 per cent, the lowest in almost a year, according to data from Texas-based Optimal Blue, a mortgage technology provider.
The next day, as rates ticked up, the volume of rate locks surged to the highest level for any single day since 2022, the company said.
“This may indicate homebuyer eagerness to lock in rates before further rate climbs,” said Mike Vough, the company’s head of corporate strategy.
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When the 30-year rate was at 6.5 per cent, about 2.5 million US borrowers were “in the money” to refinance.
This means that they could lower their rate by at least 75 basis points, according to data tracker ICE Mortgage Technology. If average borrowing costs drop to 6.125 per cent, five million mortgages would be candidates for a refinance.
It’s “go-time” for the refinancing industry, according to Kevin Peranio, a partner with Paramount Residential Mortgage Group, a national lender based in Corona, California. Falling rates will also spur more home purchases, he said.
His company is preparing for growth by hiring 20 underwriters in the US and 15 more for its offshore team in India, he said.
“Low rates are the cure for so much,” Peranio said. “Unlike last year, when every time we saw a rate improvement it was one day or a week, now it has been for months, and I think it will be more months going forward.” BLOOMBERG
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