(Bloomberg) -- US mortgage rates fell to the lowest level in almost four months last week, spurring the biggest demand for refinancing since February.
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The contract rate on a 30-year fixed mortgage decreased 20 basis points to 7.17% in the week ended Dec. 1, according to the Mortgage Bankers Association. The rate has fallen 69 basis points in the last five weeks, the biggest drop over such a time period since late 2008.
Mortgage News Daily, which updates more frequently, put the 30-year fixed mortgage rate at 7.08% on Tuesday.
Since peaking near 8% in October, mortgage rates have retreated on expectations that the Federal Reserve is not only done raising interest rates, but may start cutting them early next year. Economists contend the drop will soon translate to more housing inventory and sales as owners won’t have to take on such an onerous rate when they move.
Refinancing activity jumped nearly 14%, the most since February, helping boost MBA’s overall index of applications. Purchasing activity ticked down slightly, but still hovered near the highest level since mid-September.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
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