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After being held steady two weeks ago, mortgage interest rates resumed their decline last week, but that did not boost demand for mortgages.
The volume of mortgage applications declined by 3.1% for the week, according to the seasonally adjusted index of the Mortgage Bankers Association. The volume was up 62% from the same week of the previous year, while interest rates were significantly higher and refinancing activities were extremely low.
The average contractual interest rate for 30-year fixed rate mortgages with matching balances ($ 484,350 or less) decreased from 3.94% to 3.87%, and from 0.38% to 0%. 34% (plus points) for loans with a 20% discount. Payment. This rate was 93 basis points higher than a year ago.
"Trade tensions between the United States and China have resulted in volatile treasury rates and down last week, causing the 30-year fixed mortgage rate to fall to 3.87%, its lowest level since November 2016" said Joel Kan, associate vice president of the MBA. economic and industrial forecasts.
Refinancing requests, which were strong over the past month, fell 7% from the previous week for the second week in a row. Refinancing volume was 152% higher than a year ago, but the annual comparison has decreased in the last three weeks. It may be that most of those who could benefit from refinancing and who wish to go through the process have already done so.
Mortgage applications for home purchases, which responded less to lower rates, increased 4% for the week and were 5% higher than last year.
"Consumers continue to act on these lower rates, but market volatility is likely driving some borrowers to suspend their refinancing and buying decisions," Kan said.
Buying demand generally increases more when rates go down as much as they have, but home prices are so high and the supply of affordable homes is so low that potential buyers are pulling out. According to several reports, home price increases had declined for much of the year but had begun to strengthen in July. This coincided with a further decline in the supply of homes for sale.
Mortgage rates continued their slide on Tuesday, falling to their lowest level in three years, according to Mortgage News Daily, which offers daily rate movements. This followed a new sale on the stock market, with the entry into force of new rates. Markets are now expecting Friday's monthly employment numbers to get more clues about the health of the US economy.
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