Mortgage rates hit their highest level in a month, and weekly demand falls

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Potential home buyers come to inspect a home for sale in Dunlap, Illinois.

Daniel Acker | Bloomberg | Getty Images

Borrowers pulled out of the mortgage market last week as higher interest rates held back the recent refinancing revival.

The average contractual interest rate for 30-year fixed-rate mortgages and associated loan balances (USD 548,250 or less) increased to 3.06% from 2.99%, up a point to 0.34 from 0.30 (including processing fees) for loans with a reduction of 20%. payment.

“Mortgage rates followed a general increase in Treasury yields last week, which started with a strong July employment report and then slowed due to weaker consumer sentiment and concerns about rising Covid-19 cases.” said Joel Kahn, deputy vice president of the Mortgage Bankers Association. economic and sectoral forecasting.

Home loan refinancing applications, which are very sensitive to the interest rate, fell 5% last week from the previous week and were 8% lower than a year ago, according to the seasonally adjusted MBA index. Mortgage rates are very slightly lower than they were in August last year, but not as low as last fall, when there was a mini-refinancing boom. As a result, the pool of eligible homeowners who can benefit from refinancing is now smaller.

Home mortgage applications, which are less sensitive to weekly rate changes, fell 1% over the week and were 19% lower than a year ago. Homebuyers are withdrawing for several weeks as home availability declines and the supply of homes for sale improves only marginally.

“Despite the decline for the second week in a row, average loan sizes remain close to record levels. This is a constant sign that selling prices are still high due to fierce competition, which is driving house price increases faster, ”said Kahn.

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