WASHINGTON–The Brexit is being credited for a surge in mortgage refinancings.
The move by the U.K. to exit the European Union has led to a decline in mortgage rates in the United States, and the Mortgage Bankers Association is reporting total mortgage application volume was up 7.2% last week from the previous week.
The MBA said refinance applications are the driver of the spike, increasing 11% from the previous week to the highest level in three years.
Refinances had surged 21% the previous week and are up nearly 65% from the same week one year ago, when interest rates were higher, according to the Mortgage Bankers. The refinance share of mortgage activity increased to 64% of total applications from 61.6% the previous week, the MBA added.
The MBA data show the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.6%, from 3.66%, with points increasing to 0.36 from 0.32 for 80% loan-to-value ratio loans. For jumbo loan balances (greater than $417,000) the average rate fell to 3.61% from 3.67%.
Similarly, Freddie Mac reported that its most recent Primary Mortgage Market Survey found the average on the 30-year fixed-rate mortgage had fallen to 3.41%, just slightly above the all-time record low.
In a statement, Freddie Mac said that as a result of global pressures, it has revised its forecast down for both 2016 and 2017 to 3.6% and 4.0%, respectively.
The house price appreciation forecast for 2016 remains at 5.0%, and in 2017, 4.0%.