Falling Mortgage Rates Aren't What They Used to Be
It’s going to take an even bigger drop in rates to spark a true refinancing spree.
Not a lot of refinancing happening here.
Photographer: jandrielombard/iStockphotoThe 30-year Treasury yield has been spending some time below 2% this week, territory it has never before explored. That says scary things about expectations for future inflation and economic growth. But it also means lower mortgage rates, which in turn means refinancings and house purchases and other economically stimulative things.
And yes, a lot of people are refinancing, with the latest edition of the Mortgage Bankers Association Refinance Index, released Wednesday, up 196% over a year before. Some are buying, too, with MBA’s Purchase Index up 12%. Those numbers represent conditions as of August 9, and things may have continued to heat up since then. But overall mortgage activity has a long way to go before it approaches the heights it has reached multiple times over the past two-and-a-half decades.
The explanation for the relatively modest mortgage rebound so far is simple. As economists David Berger, Konstantin Milbradt, Fabrice Tourre and Joseph Vavra put it in a December 2018 paper: