In the photo this Friday, September 21, 2012, a house in Oklahoma City is for sale. US average rates on fixed mortgages fell again to new record lows. The decline suggests that Federal Reserve stimulus efforts may have an impact on mortgage rates. Mortgage buyer Freddie Mac said Thursday, Sept. 27, 2012, that the 30-year loan rate fell to 3.40 percent. That’s down from last week’s 3.49 percent rate, which was the lowest since long-term mortgages began in the 1950s. (Photo by AP / Sue Ogrocki)
Sue Ogrocki
Mortgage rates set another record low last week: the 15th this year and the second record in as many weeks.
The drop, however, did not cause any significant change in weekly mortgage applications, but demand is substantially stronger than it was a year ago.
The total volume of mortgage applications increased 1.1% on weekdays, according to the seasonally adjusted index of the Association of Mortgage Banks.
The average contract interest rate for 30-year fixed-rate mortgages with compliant loan balances ($ 510,400 or less) decreased to 2.85% from 2.90%, with points falling to 0 , 33 of 0.35 (including the start-up fee) for loans with a 20% down payment.
“U.S. Treasury rates remained low last week, in part due to uncertainty about the prospects for an additional government stimulus related to the pandemic, as well as concerns about the continued rise in cases of Covid-19 across the country, ”said Joel Kan, associate vice president of the MBA chair of economic and industrial forecasting.
Applications to refinance a home loan, which are more sensitive to fluctuations in mortgage rates, rose 1% during the week, but were a strong 105% more than the same week ago. year. Last year, at that time, mortgage rates were 113 basis points higher. Refinancing would now give everyone who refinanced last year a substantial savings on their monthly payments.
Mortgage applications to buy a home increased 2% per week and were 26% higher annually. December is not usually a strong month for home sales, but demand continues to rise as Americans continue to work from home. They want more space and some now have the ability to work from anywhere, giving them many more relocation options.
“Applications to buy a home increased for the fourth time in five weeks as conventional and government market segments increased,” Kan said. “Government purchase requests rose for the sixth consecutive week to the highest level since June, perhaps a sign that there are more first-time buyers entering the market.”
First-time buyers have faced stiff competition due to the seriously low supply at the entry level of the market. Heavy cash investors continue to pile up and housing builders are not building nearly enough low-cost homes to meet demand. House prices at the bottom are rising faster, leaving some potential buyers on the sidelines.