Lower mortgage rates and high appreciation in some areas are driving a national surge in home refinancing.
Both purchase and refinance applications jumped in the past week, with mortgage applications up 26.8 percent from a week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 7, 2019. Refinance applications jumped 47 percent in the same period to the highest level since 2016, according to Joel Kan, MBA's associate vice president of economic and industry forecasting.
In the past seven months, mortgage rates have dropped a percentage point, with the national average 30-year fixed mortgage rate at 3.97 percent, according to Bankrate.com. The 15-year fixed rate is 3.25 percent.
The drop in rates has opened the refinancing door to many homeowners, primarily those who have taken out their mortgages in the last two years, when rates were higher, and those who missed previous refinancing opportunities, says Greg McBride, chief financial analyst at Bankrate.com. “This is the first glimpse we've had of rates this low in 18 months,” he says.
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In addition, a new Bankrate.com survey shows that 66 percent of those living in the same home as before the Great Recession say their home is worth more than it was pre-recession.
"We've seen some pretty solid appreciation” in some markets nationwide, says Richard Bettencourt, president of the National Association of Mortgage Brokers. Yet some states — Louisiana, Mississippi, Arkansas, West Virginia and Illinois — have areas where homes are still “underwater” — worth less than what the owners owe on their properties, according to ATTOM Data Solutions’ first quarter 2019 U.S. Home Equity & Underwater Report.