Mortgage rates fall for the first time in 3 weeks, but demand is still low

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People are waiting to visit a home for sale in Flower Park, Nassau County, New York.

Wang Ying | Xinhua News Agency | Getty Images

After a three-week hike, mortgage rates fell slightly last week, but this doesn’t seem to have had much of an impact on mortgage demand.

Total filings rose 1.6% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contractual interest rate for 30-year fixed rate mortgages and associated loan balances ($ 548,250 or less) fell to 3.03% from 3.06%, while the interest rate fell to 0.29 from 0 .34 (including issuing fees) for loans with a 20% decrease. payment.

“Treasury yields fell last week as investors continue to watch with dismay if the surge in COVID-19 cases in several states is starting to weaken economic activity. As a result, mortgage rates have dropped slightly, ”said Joel Kahn, an MBA economist.

Home loan refinancing applications, which are very sensitive to the interest rate, rose just 1% in a week and were 3% higher than in the same week a year ago. The problem is that so many borrowers have already refinanced at even lower rates last fall.

Home loan applications rose 3% over the week, but were 16% lower than in the same week a year ago. Home buyers are hitting the affordability wall, and the supply of homes for sale, although slightly increasing, is still too small.

“The buying index was at its highest level since early July, despite still lagging behind 2020,” Kahn said, adding: “There has also been some softening in average loan sizes, potentially a sign that all more new buyers are looking for homes with lower prices, helped by the recent surge in the number of homes for sale for both newly built and existing homes. “

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