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Residential mortgage activity continued its upward climb last week, as borrowing costs dipped below the 6-percent threshold for the first time in nearly four years and borrowers took advantage of the fleeting window of opportunity.
There was a 12.1 percent weekly jump in new mortgage applications across the board, according to the latest survey from the Mortgage Bankers Association, which looked at loan activity for the week ending Feb. 27. The number of applications also was up 23.1 percent from four weeks prior and a striking 53.1 percent year over year.
However, the overall increase in activity was not as strong as the week ending Feb. 20, when total mortgage applications surged more than 66 percent. Loans, meanwhile, continued to grow in size. As of the end of last week, the average loan had ballooned by more than 62 percent year over year to reach $423,400.
The average 30-year mortgage rate fell last week to 5.98 percent. It had not dipped below 6 percent since September 2022. The rate, however, bumped back up to 6.26 percent as of Tuesday, per Investopedia.
Rates started to fall around August, when Jerome Powell, chairman of the Federal Reserve, suggested there would likely be rate cuts in the near future; three soon followed. Mortgage application activity has been increasing since.
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Refinancing loans have been the biggest beneficiary of the rate drop. Compared to a year ago, refi applications have soared by 108.8 percent, according to MBA’s survey for the week ending Feb. 27. However, that increase wasn’t as high as it was for the week ending Feb. 20, when refinancing applications were up by more than 150 percent year over year.
Meanwhile, new purchase loan applications rose 9.6 percent year over year, for the week ending Feb. 27. That also was a weaker growth rate than the week before, which saw a yearly increase of 12.4 percent.