While England gets a new Prime Minister this week, the fallout from the United Kingdoms withdrawal from the European Union or Brexit is still affecting mortgage rates here in the United States

A sharp drop in mortgage interest rates is putting more money in the pockets of U.S. homeowners through refinancing.

Total mortgage application volume surged 14 percent for the week ending July 1st from the previous week, according to the Mortgage Bankers Association (MBA). The measure is seasonally adjusted. Application volume is now 66 percent higher than one year ago.

Diana Olick, reporting for CNBC News, writes the fact behind the surge is a refinancing boomlet. Applications to refinance home loans jumped 21 percent for the week, and they are now 113.5 percent higher compared to one year ago, when rates were about three quarters of a percentage point higher. A drop in rates for larger, so-called jumbo loans, is leading the refi run. Some of these refinances are cash-out, as borrowers take advantage of high home values.

“Mortgage rates have been low for years, but the impact of Brexit has brought us close to record lows once again, with jumbo rates already at their lowest levels, giving more borrowers a larger incentive to refinance,”said Mike Fratantoni, chief economist for the Mortgage Bankers Association. 

There was a small boost in mortgage applications to purchase a home, although they are far less sensitive to weekly rate moves. Purchase volume rose 4 percent for the week and was 23 percent higher than the same week a year ago.

“Even though financial market volatility may be causing some anxiety, the combination of low rates and still strong job market gains in the U.S. outweighs those fears for these homeowners,” said Fratantoni. 

Mortgage rates moved even lower Tuesday of last week, as the yield on the 10-year Treasury, which rates loosely follow, fell to new lows. Some lenders were quoting 3.25 percent on the 30-year fixed for high quality borrowers, according to Mortgage News Daily.

The longer term trends remain squarely in favor of the current low mortgage interest rates. It’s time to call your local mortgage lender to refinance your loan or start the process to move up to a largest home with a lower mortgage rate.

Jeremy Engle
Country Club Mortgage 
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