- Mortgage borrowers are rushing to refinance their loans as borrowing costs tumble.
- Last week, mortgage rates fell to their lowest since May of last year, according to Freddie Mac data.
- Refinancing applications soared 34.5% to their highest level in over two years.
Homeowners are rushing to refinance their mortgages as borrowing costs tumble for a second week.
The 30-year mortgage rate fell for the second week in a row last week to 6.47%, the lowest level since May 2023, according to data from Freddie Mac.
The dip spurred an influx of refinancing applications as borrowers sought to take advantage of the lower rates.
The Mortgage Bankers Association's refinancing index rose to its highest in over two years, notching a 34.5% jump from the week prior, and a 118% jump from the same period last year.
"Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week's rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance," MBA chief economist Joel Kan said in a Wednesday statement.
The decline in mortgage rates could be fueling greater optimism in real estate markets in general, too. Overall applications soared around 17% while purchase applications rose 3% from the week before, "with small gains seen across the various loan types, indicating that prospective homebuyers are slowly reentering the market," Kan said.
Experts expect these trends to continue. Redfin's head of economic research Chen Zhao said mortgage rates will likely drop more by the end of the year, though they still won't get close to the historic lows seen during the pandemic.
"It's very possible that mortgage rates will be in the lower sixes by the end of this year," Zhao said in an interview with Business Insider. "They could be hitting the high five or mid-fives towards the end of next year."
Others say the mortgage dip may be an outsized reaction to a weak jobs report and the historic market sell-off from earlier this month.
"Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing," Freddie Mac's Chief Economist Sam Khater in a statement.