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Consumers surged to take advantage of low rates in 2016's final months

March 14, 2017

In the immediate wake of the recent presidential election, mortgage rates rose sharply. Experts cautioned at the time that it would be wise for any homeowners who had yet to refinance their mortgages to do so quickly, as the near-record low rates seen for months weren't likely to return. New data now suggests that as 2016 came to a close, plenty of owners took that advice to heart, and will likely save a lot of money as a result.

"The number of mortgages originated nationwide is up 2%."

In the final quarter of 2016, the number of residential mortgages originated nationwide climbed to nearly 1.75 million, a number that was down 15 percent from the third quarter of last year but up 2 percent on an annual basis, according to the latest U.S. Residential Property Loan Origination Report from ATTOM Data Solutions. This came even as consumers sought 12 percent fewer purchase mortgages annually; refinances jumped 20 percent during the same period.

"Refinance originations continued to post strong numbers compared to a year ago in the fourth quarter even as purchase originations decreased on a year-over-year basis for the second consecutive quarter," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "The increase in refinance originations is surprising given the rising interest rates in the fourth quarter, but many homeowners may have been trying to lock in still relatively low interest rates before those interest rates rose further."

The trend continues
Because mortgage rate increases have stalled out somewhat in the new year, there's still plenty of reason for current owners to get in the market as well, and the most recent data shows that they're doing so. Refinances made up just 45.1 percent of mortgage applications in the week ending Feb. 24, according to the latest Weekly Mortgage Applications Survey from the Mortgage Bankers Association. However, the number of these requests rose 5 percent from the previous week, and hit the highest level observed since December.

Indeed, the average rate on 15-year fixed-rate home loans - most often used in refinances - slid somewhat, falling to 3.51 percent from the previous week's 3.56 percent, the report said.

"It has become difficult to predict how rates will move."

Where will rates go next?
It has become difficult for experts to predict exactly how rates will move, and as such, many are preparing for a number of eventualities, according to the latest data from Freddie Mac. For instance, if inflation keeps rising, the number of mortgage originations could start to go down, but any flattening or declines in inflation could keep activity going strong. Sean Becketti, the chief economist at Freddie Mac, noted that whatever course inflation takes, the impact on the national housing market is likely to be significant.

Regardless of how rates move, prices are expected to continue their sizable increases for some time to come. With this in mind, it's important for would-be buyers to get into the market as soon as possible, because doing so may help them save thousands.




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