Masses of homeowners are looking to take advantage of the present Fed Chief Ben Bernanke recently slipped under the Christmas tree: lower mortgage rates.
As a result of two recent announcements by the Fed–that it would buy Fannie and Freddie debt and mortgage backed securities and might even purchase long-term Treasury bonds–average 30-year fixed mortgage rates dropped more than a half point, from 5.99 to 5.47, during the week ending November 28, according to the Mortgage Bankers Association.
The lower rates triggered a flood of refinancing applications. “The Refinance Index increased 203.3 percent to 3802.8 from the previous week and the seasonally adjusted Purchase Index increased 38.0 percent to 361.1 from one week earlier,” the MBA said in the report. “The refinance share of mortgage activity increased to 69.1 percent of total applications from 49.3 percent the previous week.”
Mike Larson, real estate analyst at Weiss Research, said the survey makes clear that the Fed got “quite a bit of bang for its buck” form its recent actions. “We just saw the single-biggest weekly rise in applications in the history of the group’s index, which dates back to 1990,” he said in a report.
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