Mortgage rates took a dive this week, and it didn’t take long for homeowners looking to refinance to pull the trigger and get a better interest rate on their loans.
According to the Mortgage Bankers Association, applications to refinance current mortgages increased by a seasonally adjusted 17.2% during the last two weeks of February. Outright home mortgage purchases were also on the uptick (9% rise week-to-week) according to the MBA.
That’s not a surprise, as mortgage rates have once again taken a southward drift in recent weeks, all the way down to about 5%, according to the BankingMyWay Weekly Mortgage Rate Tracker. When rates are down, home buying and refinancing activity go up. Take the 17% rise in refinancings last week. Prior to that, when mortgage rates showed signs of climbing upward, the MBA reports that the rolling four-week average for refinancing rose by only 1.8%.
Similarly, purchases of new homes across the U.S. fell by 2.7% over the same period.
Why the hike in mortgage activity? You can’t point to last Friday’s better-than-expected U.S. unemployment number (which officially remains at 9.7%). Even though the jobless number may be the most important economic indicator these days (consumer sentiment historically tracks the unemployment number, good or bad) that number came out well after the MBA released its mortgage numbers.
What did happen after the release of the jobs report on Friday morning was an immediate uptick in the U.S. stock market and a boost in 10-year Treasury notes to 3.68%, thus sending bond prices — and mortgage prices — on a roller-coaster ride for the duration of the Friday trading session.