Mortgage rates rose again last week, prompting homeowners and potential home buyers to withdraw loans.
The overall volume of mortgage applications decreased 5.1% from the previous week, according to the seasonally adjusted Mortgage Bankers Association index.
The average contract interest rate for 30-year fixed-rate mortgages with compliant loan balances ($ 548,250 or less) increased from 3.33% to 3.36%, from 0.39 to 0.43 (including home commission) for loans with a 20% down payment.
As a result, applications to refinance a home loan, which are more sensitive to weekly rate movements, fell 5% during the week and were 20% lower than a year ago. This is the slowest pace since last June.
“Refinancing applications declined for the fifth consecutive week, but there was an increase in VA lending activity,” said Joel Kan, an MBA economist. “Overall, demand for refinancing has declined, with volume from the last ten weeks reduced by more than 30%.”
Mortgage applications to buy a home fell 5% a week and were 51% higher than a year ago. This annual comparison will be very large in the coming months, as the real estate market stagnated almost completely last year at this time, when the pandemic closed the economy. It started a spectacular rebound in early summer.
“The rapid recovery of the economy and the improvement of the labor market generates considerable demand for home purchases, but activity in recent weeks is limited by faster growth in house prices and an extremely low inventory said Kan.
Mortgage rates have fallen this week after refusing to exceed recent highs. This could bode well for home buyers in the coming weeks.
“Evidence of a favorable change in the rate environment is beginning to rise,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “The change could be disappointing or short-lived, true, but almost anything is better than the first quarter of 2021. Simply drifting to current levels would be a big win.”