The increase in mortgage refinances, which began following Brexit, continues. With an increase of 11 percent in the previous week, the volume of refinances hit another high. The Mortgage Bankers Association (MBA) reported that mortgage applications increased by 7.2 percent from last week, while refinances set a new three-year high. The number of refinances was almost 65 percent more than the same time last year.
Refinances also make up the greatest share of mortgage loans currently being made. Sixty-four percent of all mortgage applications are for a refinance loan, up from last weeks' 61.6 percent.
Driving this large volume of refinances are interest rates that have hit the lowest levels since May 2013. With a 3.6 percent rate on 30-year loans under $417,000, many who have yet to take advantage of the benefits of refinancing are doing so. Jumbo mortgages are seeing almost identical rates to conventional mortgages as rates drop to 3.61 percent.
The number of applications for new mortgages did not change from the previous week because these applications are generally not as sensitive to changes in interest rate. However, the total volume of new mortgages was down from this period last year by 5 percent.
Another reason refinances are growing, while new mortgages are not, is that lower rates do not affect the number of homes on the market or help offset the increasing prices of real estate.