New Mortgage rates hit new low as homeowners move to refinance

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CNBC’s Diana Olick reports the latest numbers on mortgage demand. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

Mortgage rates moved even lower last week after setting multiple record lows in recent months, spurring more borrowers to call their lenders and apply for a refinance, but homebuyers were not quite as motivated.

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The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 slipped to 3.01% from 3.05%, while points decreased to 0.37 from 0.52 for loans with a 20% down payment.

In response, refinance application volume, which is most sensitive to weekly rate moves, rose 8% for the week and was 50% higher than a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. That is the highest refinance volume since mid-August.

Applications for a mortgage to purchase a home fell 2% for the week but were 21% higher than a year ago. While the annual comparison is strong, purchase volume has been falling little by little and is now down just over 4% from four weeks ago.

“There are signs that demand is waning at the entry-level portion of the market because of supply and affordability hurdles, as well as the adverse economic impact the pandemic is having on hourly workers and low- and moderate-income households,” said Joel Kan, an MBA economist. “As a result, the lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances.”

The average loan size increased again, to a record $371,500, thanks to stronger activity on the high end of the market.

Mortgage rates climbed slightly to start this week but are likely to head lower on the news that President Donald Trump said he is halting stimulus negotiations until after the election.

“Markets entered a logical tailspin resulting in significant stock losses and improvements for bonds,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “These sorts of bond market improvements typically result in lower rates.”

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  1. Just refinanced myself. Bought my house last year July at 4.125%…. refinance just finished last week 3%. Dropped $210 off my payment. Before my mortgage+taxes+hoa equal to about $150 less what it cost to rent my place in my area. Now knowing one couldn't even live in my subdivision for what I pay and the comfort of being able to profit close to $400/month god forbid I need to move or I lose my job is amazing. Prices are inflated but wait until the eviction bans get lifted. Demand is gonna drive prices up even more.

  2. As A Veteran im in the middle of Refinancing at 2.25% 30 year… in no hurry too pay off…..

  3. What?! This is shocking news! Refinancing is the trend in a practically zero rate environment? Houses are over priced? Amazing!

  4. Those low rates are in places out in the middle of nowhere and are added in the overall national rates. If you live in a normal city you're looking at 3.6% with a 20% down payment at the lowest. Average is close to 3.8 – 4.2% They are trying to artificially keep the housing market afloat by lowering rates inflating housing prices to make it seem like its booming. All the signs right before a crash. End of the year beginning of the new year the bubble is going to pop.