U.S. homeowners are refinancing their mortgages and taking out new loans at a record pace, pouncing on the lowest borrowing rates in four years.
The Mortgage Bankers Assn. said its index of mortgage refinancing applications rose to its highest level ever last week, up 89% from a week earlier, and more than twice the level of a year earlier. The group's index for new mortgages also climbed to a record high, up 13.6% last week from the week before.
The Treasury bond rally that drove benchmark yields to record lows also pushed 30-year mortgage rates down to an average 6.89% last week, creating the best opportunity for refinancing since September 1993, according to Freddie Mac, the second-largest financier of U.S. home mortgages.
Homeowners with 30-year $100,000 mortgages fixed at 7.6%, the average rate last year, can now slash their monthly payments by refinancing and save $89 a month.
