ShareRefinance applications have gone up due to record low mortgage rates. Last week the Mortgage Bankers Association reported that the refinance percent of total applications continues to rise after a few months of unpredictability. During the week of October 23, the refinance percent of total applications rose to 66.7% after the share hit a low of 59.5% during the week of May 29.
Looking back at the data from January 2019 we can see a significant increase in refinance activity as interest rates declined. Refinance application activity took a meaningful dip in December 2019 before spiking up in the beginning of March 2020. Application activity fell from the highs of March in the beginning of April 2020 but continued to increase in the months to follow.
Let’s take a look at refinance applications by loan type. In this chart, we can see that FHA and VA loan applications have had the largest gain since January of 2019. Conventional loan applications have also been on the incline and were actually trending higher than FHA and VA loans starting the year of 2019. Over this time period, FHA and VA loans have grown 36.3% and Conventional loans have grown 16.2%.
Homeowners are taking advantage of lower interest rates and higher home price values due to low inventory levels. The higher home price values are increasing equity for those who desire to do cash-out refinances or just refinance to lower their rate and monthly mortgage payments. Lower monthly payments will equate to hundreds and in some cases, a few thousand dollars saved annually.
