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Mortgage rates rose again last week, prompting homeowners and potential buyers to reduce their borrowing.
The overall volume of mortgage applications fell 5.1% 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 compliant loan balances ($ 548,250 or less) fell from 3.33% to 3.36%, with points falling from 0, 43 to 0.43 (including set-up costs) for loans with a 20% reduction. Payment.
As a result, mortgage refinancing requests, which are the most sensitive to weekly rate movements, fell 5% for the week and were 20% lower than a year ago. This is the slowest pace since last June.
“Refinancing requests declined for the fifth week in a row, but there has been an increase in VA lending activity,” said Joel Kan, MBA economist. “Overall, the demand for refinancing has declined as the volume for the past 10 weeks has fallen by more than 30%.”
Mortgage applications for the purchase of a home are down 5% for the week and 51% more than a year ago. This annual comparison will be very important over the next few months as the housing market almost completely stagnated last year around this time when the pandemic brought the economy to a halt. It rebounded dramatically at the start of the summer.
“The rapid recovery of the economy and improving labor market are generating significant demand for home purchases, but activity in recent weeks has been constrained by faster growth in house prices and extremely low inventories.” Kan said.
Mortgage rates fell this week after refusing to cross recent highs. This could bode well for buyers in the coming weeks.
“The evidence of a favorable change in the rate environment is starting to be felt,” wrote Matthew Graham, COO of Mortgage News Daily. “The change could be disappointing or short-lived, that’s true, but almost everything is better than the first quarter of 2021. To simply drift sideways to current levels would be a big win.”
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