A “Doors Open” sign is displayed in the front yard of a home for sale in Columbus, Ohio.
Ty Wright | Bloomberg | Getty Images
Mortgage interest rates have risen in four of the first six weeks of 2021, calming mortgage demand.
The overall volume of mortgage applications fell 4.1% last week compared to the previous week, according to the seasonally adjusted Mortgage Bankers Association index.
The decline occurred when the average contract interest rate for 30-year fixed-rate mortgages with compliant loan balances of up to $ 548,250 rose to 2.96%, from 2.92%, to to loans with an income of 20%. The rate was 76 basis points higher a year ago.
Demand for refinancing, which is more sensitive to weekly rate fluctuations, fell 4% during the week, but was 46% higher than a year ago. This annual comparison had been over 100% earlier this year, but has been declining.
“Despite some weekly volatility, Treasury rates have been driven by expectations of faster economic growth as the implementation of the Covid-19 vaccine continues,” said Joel Kan, associate vice president of economic forecasts and industrial MBA.
The mortgage refinancing rate decreased to 70.2% of total applications, from 71.4% in the previous week, the lowest level in three months.
Home buyers are also retiring, but less so due to rising mortgage rates and more due to low supply and overheating of house prices. Mortgage applications to purchase a home fell 5% a week, although they were 17% higher year-over-year.
“Purchase orders cooled in the first week of February, but home buyers are still very active,” Kan said. “The average size of the purchase loan continued to increase, reaching another peak survey of $ 402,200, as the market segment at higher prices continues to perform well.” The MBA began its weekly survey almost 31 years ago.
The higher priced segment is so good because there is so much more to offer. The low end of the market is incredibly small and this forces first time buyers to the margin. According to realtor.com, the total number of homes for sale in January reached a new low, almost 43% over the previous year. Homes also sell on average 10 days faster.