Mortgage applications surged during the first week of 2019 thanks to lower interest rates, following an unusually slow holiday period.
Application volume climbed 23.5 percent for the week ending Friday, according to the Mortgage Bankers Association weekly Mortgage Applications Survey, as the 30-year fixed mortgage rate declined to the lowest level since April. That reading was still lower, however, when compared with the same period last year.
“This drop in rates spurred a flurry of refinance activity – particularly for borrowers with larger loans – and pushed the average loan size on refinance applications to the highest in the survey,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in a statement.
Refinance activity rose 35 percent, to account for a share equal to more than 45 percent of all mortgage activity – the highest reading in nearly a year.
Mortgage applications to purchase a home also rose 17 percent last week.
As previously reported by FOX Business, the best day of the year to close on a new house was Dec. 26.
The year may be off to a strong start, but the near-term outlook is fraught with potential headwinds.
While borrowers may have experienced few problems thus far, as a partial government shutdown drags on through its third week, some Americans could begin to encounter borrowing obstacles. Fannie Mae and Freddie Mac are not government agencies – and therefore will likely continue operations as normal – but the Federal Housing Administration (FHA) – a branch of the Department of Housing and Urban Development – has shown some signs of delay, according to The Washington Post. Other borrowers in small suburbs, financing homes with mortgages backed by the U.S. Department of Agriculture (USDA), are already running into challenges, the Post reported.
According to a survey from the National Association of Realtors, of those affected by the government shutdown, 17 percent had a closing delay because of a USDA loan.
Last week, loans from the FHA accounted for 10.3 percent of mortgage application activity, while the Department of Agriculture’s share of total applications was 0.6 percent.