Jumbo, FHA Mortgage Rates Fall to Record Lows
November 5, 2020
The rates for jumbo and FHA loans dropped to all-time lows last week. Jumbo loans are for borrowers taking out larger loans while FHA loans offer borrowers’ low-down-payment loans. Their new lows fueled mortgage demand last week, the Mortgage Bankers Association reports.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) dropped to 3.18% last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.08%. The 15-year fixed-rate mortgage also saw new lows last week, decreasing to an average contract rate of 2.55%, MBA reports.
“The drop in rates spurred an uptick in demand for refinances,” says Joel Kan, MBA’s chief economist.
Refinances overall increased 6% last week and are now up 88% compared to a year ago. The drive was essentially all driven by those “seeking conventionally and government loans,” Kan says.
On the other hand, mortgage applications to purchase a home dropped 1% last week. Applications are still more than 25% higher than a year ago.
“After a solid stretch of purchase applications growth, activity decreased for the fifth time in six weeks, but has increased year-over-year for six straight months,” says Kan. “2020 continues to overall be a strong year for the housing market.”Source: Mortgage Bankers Association; “Jumbo and FHA Mortgage Rates Set Record Lows, Juicing Refinance Demand,” CNBC (Nov. 4, 2020); and “Mortgage Applications Jump 3.8 Percent as Refinance Activity Remains Strong,” Mortgageorb.com (Nov. 4, 2020)