They're rewriting the record books on mortgage rates again. Rates have dropped to a fresh all-time low, according to a weekly survey from mortgage lenders.
As a result, refinancing has rebounded and is helping more homeowners tighten their monthly budgets during the tough times brought on by the coronavirus pandemic.
Lenders say demand for refinance loans is running about three times higher than it was a year ago, thanks to the historically low mortgage rates.
The refinance rampage is back on
Overall mortgage applications were up 7.3% in the week ending April 10, led by a new refinancing surge, the Mortgage Bankers Association, or MBA, reported Wednesday.
Homeowners eager to refi and save were grabbing at record-low mortgage rates, the association says.
"The 30-year fixed mortgage rate decreased last week to the lowest level in MBA's survey at 3.45%," says Joel Kan, the trade group's vice president of forecasting.
With rates tumbling, applications for refinance loans rose 10% last week, after going down 19% the previous week. Last week's refinance requests were up 192% compared to the same week in 2019.
Refinances accounted for a solid 76.2% of all mortgage applications last week, up from 74.2% the week before.
Refinancing can mean big savings
Demand for refinance loans has been inconsistent, despite the advantages.
"Refinancing will continue to be beneficial for the many borrowers able to lower their monthly payments during this time of economic distress," he says.
One recent study found that homeowners who refinance mortgages from just last year — when 30-year mortgage rates were about one full percentage point higher — can save $60 a month for every $100,000 they borrow.
Despite today's very attractive mortgage rates, the spring homebuying season has been a challenging one because of the coronavirus crisis.
Business closures have led to mass layoffs, causing many would-be homebuyers to hold off. Meanwhile, open houses have been canceled and agents are relying on 3D tours and video calls to show homes.
Mortgage "purchase applications" — for loans to buy homes — fell 2% last week and were down for the fifth week in a row, the mortgage bankers say.
"The purchase market is still expected to rebound, as long as the public health measures to reduce the pandemic's spread are successful and result in a broader recovery," says Kan.
The turnaround will be helped by mortgage rates that are expected to stay low. A new forecast from mortgage giant Freddie Mac predicts rates on 30-year fixed-rate mortgages will average 3.3% throughout 2020, down from last year's average of 3.9%.