Mortgage rates went higher last week and slowed the flood of mortgage applications, according to a new report.
But thanks to rates that remain a bargain compared to a year ago, lenders are still dealing with more than twice as many refinance applications than they were last year at this time.
Many homeowners have noticed that rates have fallen so steeply this year that a new home loan can save them money — even if they took out their current mortgage in 2018.
You might want to consider whether a refinancing would work for you.
Refis still stronger than in 2018
Mortgage applications of all types dropped 11.9% last week, the Mortgage Bankers Association (MBA) reported Wednesday.
Refinance applications fell 17% from a week earlier — but the trade group says the number of new refis was still much higher versus the same time in 2018. Last week's refinance activity was up a strong 126% year over year.
Refinancings accounted for 58.5% of all mortgage applications during the week, down from 62.2% a week earlier.
The number of purchase applications — that is, applications for loans to buy homes — fell 4% last week. But they were up 6% versus the same time a year ago.
Use this calculator to see how a refinance could cut your monthly mortgage payment.
The impact from mortgage rates
The rush to take out home loans has slowed amid recent increases in mortgage rates, says Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association.
"Interest rates continue to be volatile, with Brexit votes and ongoing trade negotiations swinging rates higher or lower on any given day," Fratantoni says.
He notes that last week's rise in mortgage rates took a heavy toll on high-dollar refinancing.
"Borrowers with larger loans are the most sensitive to rate changes, and with rates climbing higher last week, the average size of a refinance loan application fell to its lowest level this year," says Fratantoni.
Rates on 30-year fixed-rate mortgages jumped last week to an average 3.69%, from 3.57% the previous week, according to mortgage giant Freddie Mac.
The rates on 15-year fixed-rate mortgages, which are a popular refinancing option, climbed to an average 3.15%, from 3.05% a week earlier.
The outlook for mortgages
Freddie Mac will release fresh mortgage rates data on Thursday. The rates tend to follow the yield on 10-year Treasury securities, which has been going up and down this week.
The benchmark 30-year mortgage rate is likely to stay low — below 4% — through the end of 2019, according to Freddie Mac's latest forecast. The Federal Reserve is widely expected to cut interest rates again at the end of this month, which should help keep mortgage rates down.
Though mortgage rates rose last week, they're still down dramatically compared to last year at this time.
You can get a 30-year mortgage at a rate that's more than one full percentage point below the rates offered in October 2018, and Freddie Mac has said refinancers are saving an average of about $1,700 a year in interest costs.
Check out today's best mortgage rates where you live.
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