A “For Sale” sign outside a West Palm Beach, Florida home on April 7, 2021.
Marco Bello | Bloomberg | Getty Images
A prolonged period of low mortgage rates is taking its toll on the refinancing market, as most eligible borrowers have already gone through the process.
The average contract interest rate for 30-year fixed-rate mortgages with compliant loan balances ($ 548,250 or less) remained unchanged at 3.03% last week, with points rising to 0 , 34 from 0.29 (including the start-up fee) for loans with a 20% down payment.
As a result, applications to refinance a home loan fell 4 percent a week, seasonally adjusted, and were only 2 percent higher than a year ago, the Association of Mortgage Banks reported. Rates were only 5 basis points higher at this time last year, but were lower last fall and earlier this year, so a large portion of borrowers have lower rates than at present.
“Recent uncertainty about the economy and the pandemic have kept rates low over the past month, which is why the refinancing rate has fluctuated around these levels,” said Joel Kan, associate vice president of economic and industrial MBA forecasts.
Mortgage applications to buy a home rose 1% a week, but were 16% lower than a year ago. Home sales have been slowing as potential buyers have reached an affordable wall. House prices rose 18.8% in June, a record annual gain, on the national S&P Case Shiller house price index.
“Home buying activity continues to be dominated by higher market price levels, with the average purchase loan size now at $ 396,500, the highest average in five weeks,” Kan said.
Mortgage rates have started a little lower this week, but haven’t moved much yet. This could be about to change in any direction.
“All lenders will face increased volatility in the coming days due to the release of several major economic reports that will culminate in Friday’s major jobs report,” said Matthew Graham, chief operating officer of Mortgage News Daily.