Homeowners Now Leaping at Even Small Rate Dips

Homeowners aren't waiting around for dramatic moves in mortgage rates—they're jumping at even the slightest dip. The Wall Street Journal takes a look at what happened when the average 30-year fixed mortgage rate hit its lowest point in 11 months in early September, slipping 0.3 percentage points to 6.26%: refinancing activity surged by 80%, according to the Mortgage Bankers Association. But the boom was short-lived—as rates ticked back up, the rush faded.

The Journal sees a change at play. Rates were actually lower last September—they fell as low as 6.08%—but fewer borrowers took the plunge. It's possible people were holding out for further cuts, only to see rates rebound. Homeowners, especially those who bought in the last three years, now seem less willing to wait and risk losing their chance again. That's the group that's particularly motivated: About 90% of all rate-and-term refinancings in Q2 were for loans that dated to 2023 and 2024.

The Journal's take: "It may not take a huge drop in mortgage rates to unleash demand for lenders. That in turn could provide a useful cushion to consumer budgets, and the overall economy." But the AP notes that we've seen two weeks of rate increases, which "could signal a repeat of what happened last year after the Fed cut its benchmark rate for the first time in more than four years." At the time, rates had been falling, but once the Fed made its September rate cut, mortgage rates started moving north again, ultimately landing just above 7% by mid-January of this year.