The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.74 percent, from 4.84 percent, with points increasing to 0.47 from 0.42 (including the origination fee) for loans with a 20 percent down payment. The rate is 22 basis points lower than four weeks ago.
"Mortgage rates fell across the board last week and applications rebounded sharply, after what was a slower than usual holiday period" said Joel Kan, MBA's associate vice president of economic and industry forecasting. "This drop in rates spurred a flurry of refinance activity — particularly for borrowers with larger loans — and pushed the average loan size on refinance applications to the highest in the survey (at $339,800)."
Mortgage applications to purchase a home also jumped 17 percent last week but were just 4 percent higher than a year ago. Buyers returning to the market after the holidays may have been inspired by the drop in rates, but stock market volatility and the government shutdown could keep some of those applications from closing.
Just over 10 percent of real estate agents surveyed by the National Association of Realtors said the shutdown was having an impact on their clients. Some reported government employees pulling out of purchase offers and others being denied loans due to loss of income. Some reported nongovernment employees changing their minds on purchases due to overall concern and uncertainty about the economy.