Applications for U.S. home refinancing loans jumped last week which were fueled by record low interest rates. The seasonally adjusted index of mortgage applications increase of 32.2% included both refinanced and new home purchase loans with the refinancing loans accounting for 78.5 percent of the total number of applications.
After the Federal Reserve last week said it would buy Treasury securities for the first time in more than forty years, interest rates on mortgages fell yet again. This additional drop in interest rates created a substantial refinance incentive for many homeowners, and ignited an increase in refinance activity.
30-year fixed-rate mortgages now average 4.63 percent, down 0.26 percentage point from the last week, reaching a new record low.
Furthermore, interest rates are well below year-ago levels of 5.74 percent.
It's thought that the housing market is coming back, but not at a roaring rate.
To stimulate borrowing and to help boost the U.S. housing market, the Fed's purchase of the Treasury securities is part of its continued effort to reduce mortgage rates. Even with the rates as low as they are, there's been only a conservative demand for loans to buy homes, however, total mortgage applications last week were up 20.0 percent over this time last year.