As soon as the Federal Reserve announced their plan last week to buy up $600 million in mortgage securities and debt from Fannie Mae and Freddie Mac, mortgage rates dropped to their lowest levels since June 2005 (average of 5.47% as reported by the Mortgage Bankers Association). As a result, mortgage activity surged by the highest amount on record last week.
From Reuters:
U.S. mortgage applications surged by the largest amount on record last week as a new Federal Reserve program pushed interest rates down to their lowest level in more than 3 years, data from an industry group showed on Wednesday.The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Nov. 28 soared a record 112.1 percent to 857.7, the highest reading since the week ended March 21 when it reached 965.9.
'Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when the GSEs were placed under conservatorship,' Orawin Velz, Associate Vice President of Economic Forecasting, said in a statement.
'When rates plummeted following the Fed's announcement that it would buy GSE debt and MBS, many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they began to rebound,' she said.
This is a crazy market were living through.....but this shows the impact a change in interest rates can have on real estate and mortgage market activity!