NEW YORK — Lenders are being flooded with applications to refinance mortgages at a pace not seen since 2016, as US homeowners rush to take advantage of a recent drop in rates.
The Mortgage Bankers Association, a trade group, said its gauge of applications for refinancing home loans rose 0.4 percent last week from the week before, reaching its highest level since July 2016. It was the fourth straight increase.
The advance came as rates for 30-year mortgages backed by Fannie Mae or Freddie Mac fell to 3.9 percent, the lowest since November 2016, according to the MBA. Amid growing fears of a possible slowdown in global economic growth, borrowing costs are broadly falling.
“A whole lot of people who bought homes in the last three years are checking very carefully to see whether they will save money by refinancing,’’ said Jeff Tucker, an economist at the real estate data firm Zillow Group.
As of Aug. 8, some 10 million homeowners could cut their mortgage rates by at least 0.75 of a percentage point by refinancing, saving on average about $267 a month, according to analytics firm Black Knight. It’s a far cry from last year, when rates were climbing and banks were cutting mortgage workers. In 2018, the MBA’s index tracking refinancing applications fell to its lowest level in almost two decades.
Applications for mortgages to buy homes fell 4 percent last week, which helped bring overall mortgage application volume down 0.9 percent, according to the MBA. Overall volume has risen about 70 percent since the end of last year.