What’s driving this week’s spike in mortgage applications?

It’s not just lower rates. Military tensions with Iran, a robust economy and a slow holiday season all helped trigger a 30% jump, experts say.

What the heck? The Mortgage Bankers Association’s weekly mortgage survey indicates a 43% refinance increase and an overall 30.2% application spike for the week ending Jan. 10.

Mortgage rates are good-and-low, but they’ve been good, low and steady for the past several months.

Freddie Mac’s 30-year fixed rates averaged 3.93% throughout 2019. And rates have been at 3.75% or lower for the past 2 ½ months.

Why such an abrupt spike in refinance applications now?

Mideast war tensions between the U.S. and Iran are a key factor, said Joel Kan, the MBA’s associate vice president of industry surveys and forecasting.

Kan noted last week’s increase was the biggest since Jan. 9, 2015, when applications jumped 47%.

Rates had just dropped below 4% and tensions were high following Russian’s invasion of eastern Ukraine, Kan said. That triggered “a flight to safety by investors.”

Other ideas?

Economist Raymond Sfeir, director of Chapman University’s Anderson Center for Economic Growth, attributed last week’s spike to the nation’s robust economy.

“(The) unemployment rate is 3.5% with 2.3 million jobs added last year, and income is increasing,” he said. But, he added, “I will be extremely surprised if we can maintain such a high rate of increased refinancing week after week.”

There’s also been an increase in purchase-money loans due to home sales.

Nationally, the Mortgage Bankers’ purchase index increased 16% from the week before.

I say we’ve been back to a sellers market for the past few months. My own customers and even some column readers are again inquiring about strategies to be the winning bidder in multiple offer situations.

Talk about multiple offers! How about 29 offers on a Cypress property listed at $645,000 right after Christmas? Listing agent Kristina Hudes of Keller Williams thinks this is because of “timing, low inventory and low interest rates.”

Pointing to high demand and low supply, Steven Thomas of Reports on Housing thinks Southern California will see 5% in property appreciation in 2020.

Using Orange County as an example, he observed a 4% decrease in listings in 2019 from the year before. Last month, listings fell and a whopping 12% from December 2018.

“Lower interest rates are the rocket fuel that propels our market,” said Thomas.

Now what?

Before you start strategizing about your next mortgage move, consider CNBC’s shocking report that Swiss wealth giant UBS foresees slower growth thanks to tariffs on Chinese goods. UBS predicts the Fed could lower short-term rates 3 times this year.

Holy smokes!

My best advice for you is to do a no-cost home loan where you accept a slightly higher rate in exchange for the lender covering all of your refinance or purchase closing costs.

Why? Because you’ll have the opportunity to do another no-cost refi later in the year as rates fall further.

Take that to the bank.