Refinancing Activity Hits 15-Month High As Mortgage Rates Fall to Historically Low Levels
Wall Street Journal -- "The much-anticipated rise in applications to refinance existing mortgages finally came through over the past week. The Mortgage Bankers Association said Wednesday its refinancing index jumped 17% to 4676.70 in the week to Wednesday, soaring to the highest since May 2009. The rise contrasts with the four-week average of a 3.2% increase.
The sudden jump is a sign that mortgage rates—which clocked up record lows this week—have fallen far enough to encourage a new wave of refinancings from homeowners, many of whom obtained relatively low rates last year. The average rate for a 30-year home loan dropped to 4.4% last week, according to the latest Freddie Mac survey (see chart above).
A refinancing wave also could be a boon for the flailing U.S. economy. Economists at Morgan Stanley estimate that if 50% of mortgages in mortgage-backed bonds are refinanced, it would free up $46 billion a year for consumers. To put that in perspective, that is more money than the latest extension of unemployment benefits."