For the first time in four weeks, the financial market recorded a slight increase in 30-year mortgage rates. The extreme lows of borrowing costs convinced many Americans to refinance their homes.
Freddie Mac reported that the average rate for 30-year fixed rate loans increased from 4.12% to 4.14%. The McLean Virginia-based mortgage-finance company also announced an increase in the average 15-year rate from 3.23% to 3.27%.
Many homeowners were encouraged to shift into new loans with lower costs as the rates on 30-year FRM dropped from the two-year peak of 4.56% last August. In the week ended August 1, 54.5% of homeowners with a mortgage contract filed an application to cut monthly costs. According to the Mortgage Bankers Association, this is the highest level since March. The group reported a 3.8% increase in the number of refinancing applications.
Despite the variations of interest rates last week, the number of refinancing applications increased. More and more Americans are willing to take advantage of the low interest rates before they begin to increase again.
The low borrowing costs have been kept down so far by the Federal Reserve by monthly bond purchases. However, with the announcement that there will be a sixth consecutive $10 billion cut, the buying program will come to an end in October.
In November 2012, the 30-year average mortgage rate reached a record low of 3.31%.