Mortgage rates drop for the first time in 3 weeks, but demand remains weak

After rising for three weeks, mortgage rates edged down last week, but that didn’t seem to be having much of an effect on mortgage demand.

Total claim volume increased 1.6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances ($ 548,250 or less) decreased to 3.03% from 3.06%, with points dropping from 0, 34 to 0.29 (including set-up costs) for loans with a 20% reduction. Payment.

“T-bill yields fell last week, as investors continue to anxiously watch whether rising COVID-19 cases in several states begin to dampen economic activity. Mortgage rates have fallen slightly as a result. “said Joel Kan, MBA economist.

Home loan refinancing requests, which are very rate sensitive, increased only 1% for the week and 3% for the same week a year ago. The problem is, so many borrowers already refinanced at even lower rates last fall.

Home purchase loan requests rose 3% for the week, but were 16% lower than the same week a year ago. Home buyers face a wall of affordability and the supply of homes for sale, although increasing slightly, is still far too low.

“The buy index was at its highest level since early July, although it continues to lag behind 2020,” Kan said, adding: “There has also been some easing of the average loan size, which is potentially a sign that more first-time buyers looking for low-cost homes are helped by the recent increase in inventory for sale for both newly built and existing homes. ”