Mortgage rates fell again, falling to a record low for the 14th time this year. They defy their usual correlation with government bond yields, which have risen recently. And that sends more and more borrowers to their lenders looking to refinance their home loans.

Mortgage refinancing requests for the past week increased 2% from the previous week and 89% from the previous year, according to the seasonally adjusted index of the Mortgage Bankers Association. As interest rates continue to fall, millions more borrowers can save their monthly payments, even those who refinanced less than a year ago.

The average contract rate on 30-year fixed rate mortgages with compliant loan balances ($ 510,400 or less) dropped from 2.92% to 2.90% – the lowest rate in the 30-year MBA survey. The points for loans with a 20% deposit have been increased from 0.31 (including the origination fee) to 0.35. That rate was 108 basis points higher in the same week a year ago.

“The increase in refinancing requests was due to the refinancing of FHA and VA while conventional activity decreased slightly,” said Joel Kan, MBA economist.

Home purchase mortgage applications decreased 5% over the week, but increased 22% annually. Homebuyers may encounter an affordable limit as prices rise due to strong demand and low supply. This was reflected in the type of purchase mortgages that buyers applied for.

“The buying market is also close to the end of 2020 with a strong result. Applications fell slightly last week, but were around 3% more than the two weeks before Thanksgiving. In reverse to the recent trend, there was also a shift in the composition of applications As government loans increase, the average loan balance goes down, “Kan said.

Mortgage rates have moved sideways since the beginning of this week, defying a decline in related bond yields. Lenders may be left with so much demand that they are no longer tied to the bigger picture of the bond market.

“They break all the old rules and make their own,” wrote Matthew Graham, chief operating officer at Mortgage News Daily, noting that interest rates depend on the capacity of the lender for much of their daily signals. “In other words, lenders raise interest rates (or just forego lowering rates) when they are as busy as they want, and they lower rates very gradually when they are ready to do more business.”