Record low mortgage rates prompt wave of refinancing

With mortgage rates at record lows, applications to refinance mortgages increased 20 percent in the past week, the highest since April 2009, according to Mortgage Bankers Association.

“Financial markets continue to adjust to QE3, as the ongoing presence of the Federal Reserve as a significant buyer of mortgage-backed securities applies downward pressure on rates,” Mike Fratantoni, MBA’s Vice President of Research and Economics, said in the study.

The average interest rate for a 30-year fixed-rate loan fell to 3.53 percent from 3.63 percent the week before, the rate for FHA-backed loans dropped to 3.37 percent, down from 3.44 percent, according to MBA.

"Mortgage interest rates have fallen further in response to the third round of quantitative easing," Paul Diggle, property economist with Capital Economics, told Housing Wire. "This translated into stronger demand for mortgages in the closing weeks of September, both from refinancers and prospective homebuyers."

New applications for mortgages increased 16.6 percent in the past week, according to MBA.

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