A real estate agent stands in the doorway as Jovani and Nicole Quiros of Brooklyn, New York attend an open house in West Hempstead, New York on April 18, 2021.
Rachel Brightman | Newsday LLC | Newsday | Getty Images
Sky-high home prices mean demand for even larger mortgages, but those prices could also trigger a pullback in home purchases in general.
According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage applications for home purchases fell 4% last week from the previous week. Volume was just 2% higher than the same week a year ago, when the housing market was just starting to come back after the pandemic stopped it.
“For both conventional and government loans, there was a decrease in the number of purchase applications,” said Joel Kahn, an economist with an MBA. “Demand for home purchases is still high, but persistent supply shortages are holding back buying activity, and shortages of building materials and higher costs make it difficult to increase supply.”
Due to extreme scarcity, prices continue to rise at the fastest pace in more than 15 years, and as a result, the average purchase loan balance is growing at the same time. Last week, that average was $ 411,400, the highest since February.
Buyers who may remain in the market also faced higher mortgage rates in the past week. The average contractual interest rate for 30-year fixed rate mortgages and associated loan balances ($ 548,250 or less) increased to 3.15% from 3.11%, up a point to 0.36 from 0.32 (including processing fees) for loans with a reduction of 20%. payment.
The rate was slightly higher, but still lower than in March, and this provided an opportunity for borrowers wishing to save on monthly payments. Home loan refinancing applications increased 4% from the previous week, but were 2% lower than in the same week a year ago. The share of refinancing mortgage activities increased to 63.3% of the total number of applications from 61.3% in the previous week.
“Continued volatility in refinancing bids is likely if rates continue to fluctuate around current levels,” Kahn said.
Mortgage interest rates have remained unchanged this week, with no major economic reports or news to change them in one way or another.