Last week, home-purchase applications surged as mortgage rates fell to their lowest level in over a year.

The Mortgage Bankers Association (MBA) reported a 6.9% increase in mortgage applications for the week ending Aug. 2.

The average rate for a 30-year loan dropped to 6.55% from 6.82%, marking the lowest rate since May 2023.

The lower rates also led to a 16% surge in refinancing applications, which were 59% higher than the same week last year.

Refinancing allows homeowners to take out a new loan to pay off the original mortgage, offering benefits like a lower interest rate, reduced monthly payments, or a shorter loan term, Fox Business has reported.

Despite rising home values, persistently high mortgage rates have recently discouraged many homeowners from refinancing.

According to a Zillow survey, about 80% of mortgage holders currently have rates below 5%.

Written by B.C. Begley