Weekly mortgage refinancing demand shoots 23% higher, with riskier loans making a comeback

An aerial view shows a subdivision that has replaced the once rural landscape in Hawthorn Woods, Illinois.Scott Olson | Getty Imagesowners are ly looking for savings, even if it means taking on a riskier mortgage

Refinance demand, along with renewed demand for adjustable-rate loans, drove a sharp increase in overall applications last week.Total mortgage application volume rose 10.9% from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased to 6.67% from 6.77%, with points increasing to 0.64 from 0.59, including the origination fee, for loans with a 20% down payment

That was the strongest week for refinancing since last April

The refinance of mortgage activity increased to 46.5% of total applications from 41.5% the previous week."As seen in other recent refinance bursts, the average loan size grew significantly to $366,400

Borrowers with larger loan sizes continue to be more sensitive to rate movements," said Joel Kan, an MBA economist, in a release. "Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25 percent to their highest level since 2022, and the ARM of all applications was almost 10 percent."Get perty Play directly to your inboxCNBC's perty Play with Diana Olick covers new and evolving opportunities for the real estate investor, dered weekly to your inbox. here to get access today.Lower rates, however, didn't do much for potential buyers

While prices are definitely weakening in most and falling in some, they are still quite high historically compared with incomes.Mortgage rates haven't moved much to start this week, even after a key report on inflation

The monthly consumer price index was mixed, showing some impacts from tariffs but some price declines in large ."The odds of a Fed rate cut actually imved for September

Shorter-term bonds also imved (no surprise, as they are highly correlated with Fed rate expectations)," wrote Matthew Graham, chief operating officer at Mortgage News Daily. "But longer-term bonds (which includes the bonds that dictate mortgage rates) held steady."Don’t miss these insights from CNBC Nvidia gets price target hike from Goldman Sachs ahead of earningsA bearish 'double top' pattern just formed in the Dow