Mortgage rates have fallen back to near 5%, reaching a level last seen in late May and spurring a boost in applications to refinance and purchase new mortgages.
Mortgage rates fell last week, moving closer to the record lows seen earlier this year, according to the Mortgage Bankers Association's weekly survey of mortgage applications. That helped boost refinance applications by 23% from the previous week, the biggest one-week jump in applications since mid-March of this year. Applications for new mortgages increased 10% from the previous week, the largest weekly gain since early April.
Rates stayed near 5% for much of the spring, only to rise steadily in early June. Mortgage rates have typically elevated during the summer before deflating in the fall over the past 3-4 years. Still, there's considerable uncertainty beyond the fall because the Federal Reserve at some point will stop buying mortgage-backed securities that have helped to keep rates low. The Fed could wind down its purchases in the fourth quarter of the current year, although a Wednesday morning note from Bank of America analysts notes that it "seems unlikely" that the Fed will complete those purchases until the first quarter of 2010.
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