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Interest on mortgage refinancing skyrocketed earlier this year, up 20% from the previous week.
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The increase in refinancing also led to a 16.7% increase in overall demand for mortgage applications over the previous week, according to the latest survey by the Mortgage Bankers Association.
The previous week’s results included an adjustment for the holidays.
The number of people with the intention of buying a house increased by 8% last week.
“Expanding refinancing activity in the first full week of 2021 caused mortgage applications to reach their highest level since March 2020, despite the fact that most mortgage rates in the survey went up last week,” said Joel Kan, associate vice president of economic and industrial forecasts for the MBA. “The expectation of further fiscal stimulus from the new administration and the launch of vaccines improving the outlook has increased yields and Treasury rates.”
HOUSE PRICES ARE MORE INCREASED IN MORE THAN 6 YEARS
The refinancing share of the mortgage activity increased to 74.8% of total applications from 73.5% in the previous week.
Demand for mortgages and refinancing increased despite the 30-year fixed mortgage rate rising two basis points to 2.88%.
The 15-year fixed rate mortgage, however, dropped to 2.39%.
“Sustained housing demand continued to support growth in purchases, with activity growing almost 10 percent over the previous year,” added Kan. “The lowest average loan balance observed was partly due to an increase of 9, 2 percent in FHA orders, which is a positive sign of more low-income and first-time buyers returning to the market. “
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The survey covers more than 75% of all retail residential mortgage orders in the U.S. and has been done weekly since 1990.