In just the past eight days, rates fell more than 15 basis points and then bounced right back again.
Mortgage interest rates have been falling since May, especially sharply this month, so borrowers, especially millennials, are rushing to refinance.
Applications to refinance were up a stunning 116% this week compared with a year ago, according to the Mortgage Bankers Association. That has lenders scrambling to keep up.
Quicken Loans, the nation's largest mortgage lender, just saw the best quarter for mortgage originations in the company's 34-year history. It originated more than $11 billion in mortgage volume in June alone, the highest for any month ever, according to a release. That brought the total quarter volume to a record $32 billion. It is now looking to hire 1,300 more employees, the majority at its Detroit headquarters.
Part of that was a slight uptick in homebuying, but much of it was refinancing, as the average rate on the 30-year fixed slid well below 4%. Refinancing had dried up dramatically just a year ago, as interest rates rose. Some lenders let go of workers, as business slowed.
Millennials were especially reactive to the rate drop. In June 2018, just 8% of millennial mortgage applications were to refinance; the rest were to buy a home. This June that jumped to 14%, according to Ellie Mae.
"Savvy millennials looking to lock in lower interest rates on their mortgages have helped drive a surge in refinance activity," said Joe Tyrrell, chief operating officer of Ellie Mae. "While the Federal Reserve's rate cut doesn't necessarily mean that rates on mortgages will continue to drop, we'll be keeping a close eye on its impact on both the refinance and overall mortgage market as we do anticipate that it will affect consumer behavior, including millennials who look to lower their payments."
At SunTrust Bank, customer volume has also surged pretty dramatically. That was unexpected, as most predictions last year were that mortgage rates would rise this year, not fall, so banks and lenders are now scrambling.
"We are really looking at ways to preserve our client experience, which may mean just for consumers to be aware that it might take you a little bit longer to get through the process," said Sherry Graziano, senior vice president and mortgage transformation officer at SunTrust. "And that might mean taking a little bit longer to get a hold of the mortgage professional to assist you. But it's really important that you do get that advice from somebody who can really help you make a well informed decision, so that you can insure yourself financial confidence."