Charles H. Miller
Brexit helped push interest rates to the lowest levels in the last 3 years, and the mortgage market exploded. The total mortgage application volume surged 14% for the week ending July 1st from the previous week, according to the Mortgage Bankers Association (MBA). Compared to the previous year, the application volume is now 66% higher!
Applications to refinance home loans jumped 21% for the week, or 113.5% for the year. Some of these refinances are cash-out, as borrowers take advantage of higher home values.
“Mortgage rates have been low for years, but the impact of Brexit has brought us close to record lows once again, with jumbo rates already at their lowest levels, giving more borrowers a larger incentive to refinance,” Mike Fratantoni, chief economist for the MBA, told CNBC.
There was also a small boost in mortgage applications to purchase a home — 4% for the week and 23% higher than the same week a year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, from 3.75 to 3.66 percent, with points decreasing from 0.36 to 0.32 (including the origination fee) for 80% loan-to-value ratio loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to its lowest level since January 2011, from 3.74 to 3.67 percent, according to the MBA.
“For all intents and purposes, these rates are ‘all-time lows,’ even though there were several occasions in late 2012 where some lenders offered lower rates,” said Matthew Graham, chief operating officer of Mortgage News Daily. “If we’re talking about rates that were available for a few days here and there, then we’re not quite back to those yet. If we’re talking about the lowest stably-held rate for most top-tier quotes, we’re back.”
Even in the long term, Graham believes that lower rates will remain. They may be adjusted when situation around Brexit calms down, but we would need some kind of major economic event, like an unexpected move by the Federal Reserve, to change the current trajectory, he said.
“We just don’t have anything like that hanging over our head at the moment,” added Graham.
So why not join the ride and take advantage of low interest rates to refinance your home? The “Brexit effect” won’t last forever and sooner or later, the interest rates will rise again. Now is the time to act, and instead of asking multiple banks for their best offer, you could fill-out the online form here and let them do the hard work. When they’re done, you will be presented with multiple offers to choose from. Check it out.
