Falling Mortgage Rates Stimulates Refis Sales, But Not Homes

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As rates on 15-year mortgages hit an all-time low, refinancing requests accounted for two-thirds of mortgage applications.

Mortgage applications rose sharply last week due to renewed interest in refinancing as rates on 15-year fixed-rate mortgages plunged to their lowest level. record low… But home buyers were relatively indifferent to the lower rates: demand for home loans fell for the second week in a row to its lowest level since May 2020.

The latest weekly review of mortgage applications by the Mortgage Bankers Association found that refinancing requests accounted for 67.2 percent of all mortgage applications, up from 64.9 percent in the previous week.

Joel Kahn

“Potential buyers continue to be scared off extremely high housing prices and increased competition, ”said Joel Kahn of the MBA, noting that demand for purchase loans has been declining annually for the past three months.

Kang said mortgage rates followed the Treasury’s 10-year yield as investors became worried about rising COVID-19 cases and downside risks to economic growth.

Homeowners May Get Extra Refinancing Incentive Soon: Fannie Mae and Freddie Mac Should stop charging when refinancing, starting from August 1. The 50 basis point commission introduced during the pandemic to protect mortgage giants from losses adds $ 500 in costs for every $ 100,000 refinanced, or about $ 1,400 when refinancing a typical $ 280,000 mortgage.

Sandra Thomson, head of federal regulator Fannie and Freddie, said the FHA is canceling fees ahead of schedule because COVID relief programs have proven effective and that the agency expects lenders to pass on savings to borrowers.

For the week ending July 23, the MBA reported average rates for the following types of loans:

  • For Mortgage loans with a fixed interest rate for 30 years (the balance on loans is $ 548,250 or less), rates decreased to 3.01 percent from 3.11 percent. With a decrease in scores to 0.34 from 0.43 (including disbursement fees) for loans with a loan-to-value (LTV) ratio of 80 percent, the effective rate also decreased.
  • Fixed rates for 30 years giant mortgage (the balance on loans exceeds USD 548,250), rates decreased to 3.11 percent from 3.13 percent. With a decrease in the point to 0.27 from 0.32, the effective rate also decreased compared to the previous week.
  • For a 30 year flat rate FHA mortgage, rates fell to 3.03 percent from 3.08 percent. Although the points increased to 0.35 from 0.31, the effective rate also decreased.
  • Tariffs for Mortgage with a fixed interest rate for 15 years – popular refinancing with homeowners – fell to 2.36 percent from 2.46 percent. At the unchanged level of 0.30, the effective rate also decreased compared to the previous week.
  • For 5/1 Adjustable Rate Mortgage (ARM) rates increased to 2.81 percent from 2.74 percent. With an increase in points to 0.23 from 0.19, the effective rate increased compared to the previous week.

Email Matt Carter



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