Mortgage rates rose again last week, causing homeowners and prospective home buyers to abandon loans.
According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage applications were down 5.1% from the previous week.
The average contractual interest rate for 30-year fixed rate mortgages and associated loan balances ($ 548,250 or less) increased to 3.36% from 3.33%, up a point to 0.43 from 0.39 (including issuance fees) for loans with a reduction of 20%. payment.
As a result, the number of home loan refinancing applications that are most sensitive to weekly rate changes fell 5% over the week and were 20% lower than a year ago. This is the slowest pace since June last year.
“Refinancing applications have been declining for the fifth straight week, but there has been an increase in VA loan activity,” said Joel Kahn, an economist with an MBA. “In general, the demand for refinancing has decreased, while the volume over the past 10 weeks has decreased by more than 30%.”
The number of applications for mortgages for the purchase of a home fell by 5% over the week and was 51% higher than a year ago. This annual comparison will be very massive over the next few months, as the housing market came to a near standstill last year around the time the pandemic halted the economy. At the beginning of the summer, it rose sharply.
“The rapidly recovering economy and improving labor market are creating significant demand for home purchases, but activity in recent weeks has been constrained by faster growth in house prices and extremely low inventories,” Kahn said.
Mortgage rates have dropped this week after refusing to break recent highs. This could bode well for homebuyers in the coming weeks.
“Evidence of a favorable shift in the rate environment is starting to grow,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “The shift may be disappointing or short-lived, it is true, but almost everything is better than in the first quarter of 2021. A simple deviation at current levels would be a big win. “