Refinance Demand Jumps After Slight Drop in Mortgage Rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $647,200 or less dropped from 4.15% to 4.09% for loans with a 20% down payment following Russia’s invasion of Ukraine, causing a subsequent 9% jump in refinance demand last week, CNBC reports. The slight drop in mortgage rates marked the first decrease in 12 weeks, and borrowers were quick to act.
Mortgage rates surged yet again at the start of this week, however, jumping more than 25 basis points in just 2 days. According to leading markets economists, more gains could mean higher inflation, greater volatility, and a potential drop in demand ahead.
Investors are moving away from bonds, causing yields to rise, despite the ongoing crisis in Ukraine, which caused rates to drop at the outset.
“While the Ukraine situation does indeed drive demand for bonds, the associated inflation implications are simultaneously pushing demand away,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “The net effect was a move back up to the highest mortgage rates since early 2019.”