Refinancing surged last week as many homeowners t🐼ook advantage of a drop in mortgage rates to pay less interest on their existing 👍home loans.

The average 30-year, fixed-rate mortgage dropped to 6.87% last week, its lowest rate since March, according to the Mortgage Bankers Association (MBA). That drove refinancing to its highest level since August 2022, according to the MBA's weekly mortgage application index.

High interest rates have stymmied the housing market over thܫe past two years. Potential buyers have been pushed to the sidelines by high monthly payments. Sellers have hesitated to list their homes for sale and trade in the ultra-low mortgage rates of ye൩ars past.

How The Fed Is Making 🥃Refinancing♌ More Attractive

However, mortgage rates🍌 could🅠 be on the downtrend as a Federal Reserve rate cut is in sight.

There are two major influencing factors on mortgage rates—澳洲幸运5官方开奖结果体彩网:10-year Treasury bond yields and the 澳洲幸运5官方开奖结果体彩网:fed funds rate. As the 澳洲幸运5官方开奖结果体彩网:Federal Reserve moves closer to cutting its fed funds rate, traders are more attracted to lo𓆏nger-term bonds, pushing up prices on the 10-year bo🍷nd and pushing down mortgage rates. (Bond prices and yields move in opposite directions.)

When the Federal Reserve cuts its influential rate, mortgage interest could fall even further. 澳洲幸运5官方开奖结果体彩网:Market participants are convinced that the Fed will star𓃲🐼t cutting rates by September.

Home Purchase Applications Continue to Lag

Much of the increased refinancing activity last week came from government-sponsored loans such as 澳洲幸运5官方开奖结果体彩网:Federal H﷽ousing Administration (FHA) and 澳洲幸运5官方开奖结果体彩网:Veterans Administration (VA) loans, which typically have lower-thanꦫ-average🍰 rates.

“While FHA and VA refinance applications accounted for a significant share of tꦦhe increase, these are likely recently originated loans𝔍 with even higher than current offered rates,” said Joel Kan, MBA vice president and deputy chief economist.

While refinancing surged, home purchase applications continued to lag, down 3% compared 澳洲幸运5官方开奖结果体彩网:with the prior week, and lower by 14% from the same week last year.