Mortgage refis spike as 15-year fixed rate hits lowest since 1990

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Lower interest rates led to a spike in demand for mortgages.

The refinance area saw a huge increase in demand as the 15-year, fixed-rate mortgage fell to its lowest level in more than 30 years, according to the Mortgage Bankers Association's weekly survey.

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Overall interest in obtaining a mortgage increased as application demand rose 5.7% from the week before.

"The 10-year Treasury yield fell last week, as investors grew concerned about increasing COVID-19 case counts and the downside risks to the current economic recovery," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "Refinance applications jumped, as the 30-year fixed mortgage rate declined to its lowest level since February 2021, and the 15-year rate fell to another record low dating back to 1990." 

HOME PRICES SOAR 16.6% ANNUALLY IN MAY, MOST ON RECORD

"Refinances for conventional loans increased over 11%. With over 95% of refinance applications for fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan," added Kan.

The purchase index fell 2% for a second straight weekly decline as potential buyers continue to be put off by extremely high home prices and increased competition.

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The average contract interest rate on a 30-year mortgage fell to 3.01% from 3.11%

The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.

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