While many consumers across the country are applying to new federal aid programs that can help them avoid foreclosure, prospective homebuyers flocked to the market this week due to an unexpected drop in interest rates.
During the week ending February 18, the number of new mortgage applications increased 13.2 percent from the previous period of study, according to the Mortgage Bankers Association. On an unadjusted basis, the group observed a 14.8 percent upswing.
“Ongoing turmoil in the Middle East brought interest rates lower last week,” said Michael Fratantoni, MBA’s vice president of research and economics. “Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week.”
In addition, the number of consumers looking to refinance their homes spiked during the week, rising 17.8 percent. Overall, the interest rate for a 30-year fixed-rate mortgage decreased to 5 percent, down from 5.12 percent the week before.
Many homebuyers may have been waiting to take advantage of deals on foreclosed properties, as some experts feared rates would soon escalate. As a result, the drop in prices likely inspired consumers to action.