The more interest rates plunge, the more borrowers come out of the woodwork in a mad rush to refinance — refinance volume is now at the highest level in over a year. Total mortgage applications jumped 8.2 percent on a seasonally adjusted basis last week from the previous week, according to the Mortgage Bankers Association.
Refinances were entirely behind the gains, increasing 16 percent for the week. “Treasury rates fell again last week, and mortgage rates fell to their lowest level in over a year, with rates on jumbo loans dropping to their lowest level since December 2012,'” said Michael Fratantoni, chief economist for the MBA. “As we have noted in recent weeks, borrowers with larger loans tend to be more sensitive to a drop in rates, because they stand to benefit more from refinancing.” In fact, mortgage lenders set a new record in terms of average loan size for refinances last week at $316,000, according to the MBA. In addition to a jump in conventional refinance applications, Veterans Administration refinance volume increased by 28 percent, and the average loan size for a VA loan refinance increased to its highest on record.