Monday, March 27, 2023
HomeMarketLower Mortgage Rates Are Boosting Demand for Refinancing

Lower Mortgage Rates Are Boosting Demand for Refinancing

Mortgage applications are one gauge that gives an early look at housing demand.

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Joe Raedle/Getty Images

The recent pullback in mortgage rates caused refinances to jump last week, according to Mortgage Bankers Association data.

The trade group, which measures mortgage demand each week, said applications overall increased by 7.4% for the week ending Feb. 3. While seasonally-adjusted purchase applications gained 3% from the week prior, refinance applications led the increase, gaining 18% from the week prior.

The gains come as mortgage rates continued to fall. The average 30-year fixed mortgage rate on loans with conforming balances last week was 6.18%, the trade group said, down slightly from 6.19% the week prior.

Freddie Mac
‘s weekly mortgage rate survey, expected Thursday, will give investors an idea of rate movements this week, but one daily gauge shows that an increase could be in store. Mortgage News Daily‘s survey has shown a sharp uptick in rates this week, with the average 30-year fixed rate reaching 6.45% as of Wednesday. The 10-year Treasury yield, with which mortgage rates often move, was up 0.154 percentage point this week in the wake of Friday’s strong jobs report.

Mortgage applications are one gauge that gives investors an early look at housing demand. The readings are of particular interest as the housing market approaches its normally busy spring season. Higher rates tempered buyer demand in late 2022, but recent data, including the Mortgage Bankers Association gauges as well as pending home sales and comments from builders, have indicated that buyers could be returning to the market.

“Both purchase and refinance applications increased last week and have shown gains in three of the past four weeks because of lower rates,” Joel Kan, the association’s deputy chief economist, said in a statement. “Purchase activity that was put on hold last year due to the quick run-up in rates is gradually coming back as rates ease and housing demand remains strong, driven by supportive demographics and the ongoing strength in the job market,” Kan added.

Despite the increases, the indexes remain low compared with one year ago. The trade group’s refinance index was 75% lower than the same week in 2022, while the purchase index was 37% lower. Housing costs are one possible explanation: 82% of consumers polled by Fannie Mae in January broadly said it was a bad time to buy a home, according to survey results published Tuesday.

Write to Shaina Mishkin at


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