The lowest mortgage rates in a year and a half do not impress buyers

Mortgage rates are falling rapidly, but not enough to offset the high housing prices. Buyers continue to fall back.

The total volume of mortgage applications increased by 1.5% last week compared to the previous week and 12% over the previous year, according to the seasonally adjusted index of the Mortgage Bankers Association. The gains were generated by refinancing.

The average contract interest rate for 30-year fixed rate mortgages with matching balances ($ 484,350 or less) decreased from 4.33% to 4.23% at the end of last week. , and from 0.42 to 0.33 point loans with a down payment of 20%.

"Mortgage rates have fallen to their lowest level since the first week of 2018, due to growing concerns about ongoing trade tensions with China and Mexico," said Mike Fratantoni, Executive Vice President and Chief Economist. MBA. "Some borrowers, particularly those with larger loans, have seized the opportunity to refinance, bringing the index and average size of refinance loans to their highest level since early April. , refinancing for FHA and VA loans jumped 11%. "

Total refinancing volume increased 6% from the previous week and was almost 33% higher than a year ago, while interest rates were up 52 basis points. The refinancing share of mortgage activity increased from 39.7% the previous week to 42.2% of total claims.

Refinancing is very rate-sensitive, and the rate cut has added about 2 million additional borrowers to the pool of those who could benefit from refinancing, according to Black Knight, a mortgage badysis and badysis software company. .

Mortgage applications for the purchase of a home, however, decreased by 2% for the week and were just 0.5% higher than those of the previous year. High prices continue to marginalize buyers, especially first-time buyers, who are a growing segment of the market. The Millennials are in their first years of buying homes, but they are in debt, are probably paying high rents and are facing one of the least affordable markets in decades.

"At the end of the Memorial Day holiday, and probably affected by the volatility of the financial markets caused by trade tensions, the volume of requests for purchase has decreased for the week." Potential buyers could be more cautious given increased economic uncertainty, "said Fratantoni.

Mortgage rates continued to fall sharply this week to their lowest level since August 2017. Other economic data in the coming days, including the very important monthly employment report released on Friday, could lead to a new advance in both directions.