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Mortgage rates have recently risen sharply, albeit low. However, the mixed rate picture last week was enough to stall the recent surge in refinancing demand.
According to the Mortgage Bankers Association, the average rate on 30-year fixed loans with a matching balance and 20% down payment increased slightly to 3.11% from 3.09% after two weeks of decline. The 15-year fixed-rate loan used by about one in five borrowers to refinance fell to 2.46%, the lowest level since January.
“The yield on 10-year Treasuries fell sharply last week, in part as investors became more worried about the spread of the Covid species and their impact on global economic growth,” said Joel Kahn, an economist with an MBA.
As a result, mortgage refinancing applications fell 3% on a seasonally adjusted basis last week and was 18% lower than a year ago. Refinancing demand has been lower on an annualized basis for some time now because interest rates hit more than a dozen record lows last year, which has driven refinancing demand sharply.
Home mortgage applications fell 6% last week and fell 18% year over year. High house prices are crowding out some buyers, and while the number of new offers is finally on the rise, the supply of homes for sale is still historically low, especially in more affordable categories.
Mortgage rates fell more sharply earlier this week after a massive selloff in the stock market on Monday. Concerns over the delta option and news of positive test results for Olympic athletes and Major League baseball players have pushed investors to jump into the relative safety of the bond market.
Refinancing could gain momentum in the future after mortgage giants Fannie Mae and Freddie Mac announced their waiver last Friday.Getting rid of unfavorable market fees charged to lenders for all refinancing. The fee was introduced at the start of the pandemic and passed on to borrowers, so canceling it could now be a source of additional savings.