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The
drop in mortgage rates and bond yields followed Britain's
surprise vote to exit the European Union on June 22. This stoked
fears about global growth and bets on more stimulus from
overseas central banks, sending U.S., U.K., European and
Japanese yields to historic lows.
The Mortgage Bankers Association said its seasonally adjusted
index of refinancing applications soared 20.8 percent in the
week ended July 1 to its highest level since January 2015.
The share of weekly refinancing requests rose to 61.6 percent of
total applications, up from 58.1 percent the prior week and its
biggest share since February, the Washington-based group said.
The average rate on 30-year home mortgages fell to 3.66 percent,
the lowest since May 2013, from 3.75 percent the previous week,
MBA said.
The number is less than a quarter-percentage point above the
historic low of 3.47 percent recorded in December 2012.
"Interest rates continued to drop last week as markets assessed
the impact of Brexit, downgrading the likelihood of additional
rate hikes" by the Federal Reserve, said Mike Fratantoni, MBA's
chief economist in a statement.
Mortgage rates are poised to fall further. On Wednesday,
benchmark 10-year Treasury yield <US10YT=RR> touched a record
low of 1.321 percent, according to Reuters data.
The surge in refinancing activity propelled total weekly
applications by 14.2 percent on a seasonally adjusted basis to
its highest level since June 2013, according to MBA data.
The group's gauge on loan requests for home purchases, a leading
indicator of home sales, rose 4.3 percent.
(Reporting by Rodrigo Campos and Richard Leong; Editing by Diane
Craft and Chizu Nomiyama)
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