More Americans are refinancing their mortgages, according to a new report, an encouraging sign that government programs designed to help underwater homeowners could be taking off finally.
The Home Affordable Refinance Program was revamped in December, but has been a bit slow to help out the more than 6 million Americans who owe more on their homes than what they are worth.
But refinancing activity surged 26 percent last week to its highest level in six months according to the Mortgage Bankers Association, as interest rates dropped to even lower levels on worries about Europe's fragile economic situation. Investors have flooded into U.S. treasury bills as debt troubles in Europe's financially weaker countries have bubbled up again, which drives interest rates down here.
Average interest rates for conforming 30-year fixed-rate mortgages hovered around 4.06 percent, according to the report, the lowest rate in the history of the survey. Fifteen-year fixed-rate loans also fell to record lows, with rates dropping to 3.33 percent.
The MBA also reported an uptick in demand for new home loans, which rose by more than 10 percent. That demand could translate into an increase in existing home sales data, which the National Association of Realtors releases Friday.