Mortgage Refinancing Reached Eight-Month High in October

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The level of mortgage refinancing activity in the United States in October reached its highest level since February of this year. This was one of the highlights of a recent report issued by the London-based research consultancy Capital Economics.

The applications for mortgage refinance rose by 18.8% in October on a month-over-month basis. One of the major U.S. mortgage lenders, Quicken Loans, reported doubling of the applications for refinance during the month.

The Capital Economics report indicates that the increase mortgage refinance activity was driven by the lower mortgage rates in October. The average rate of a 30-year fixed rate mortgage reached 3.92% during the month, according to the Primary Mortgage Market Survey of Freddie Mac. This was its lowest level in 18 months. The decline in mortgage rates started in the final days of September when the investor demand for U.S. bonds rose due to fears associated with the instability of the global economy.

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An analytical report of Black Knight Financial Services indicated that 11% of borrowers with a 30-year fixed-rate mortgage loan in the United States paid rates above 5% and had solid credit in October. The analysis estimated that 4.4 million borrowers could benefit from the lower rates during the month

The property economist of Capital Economics, Paul Diggle, commented that the boost in mortgage refinancing activity will not be sustained as the Federal Reserve’s approach for financial tightening is projected to pus mortgage rates up. He noted that while refinance activity experienced a sharp increase, the increase in mortgage applications for home purchase was modest in October. The demand for home purchase loans rose by 0.5% on a month-over-month basis.
The increase in the demand for home purchase loans and mortgage refinance coincided with loosening of the mortgage credit standards for a second quarter in a row. This was revealed in the Senior Loan Officer Survey.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
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