Weekly Demand for Mortgage Refinancing Falls Due to Lower Interest Rates

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A “For Sale” sign near a home in West Palm Beach, Florida on April 7, 2021.

Marco Bello | Bloomberg | Getty Images

The prolonged period of low mortgage rates is taking its toll on the refinancing market as most qualifying borrowers have already gone through this process.

The average contractual interest rate for 30-year fixed rate mortgages and associated loan balances ($ 548,250 or less) remained unchanged at 3.03% last week, up a point to 0.34 from 0.29 (including issuance fees) for loans with a reduction of 20%. payment.

As a result, the number of applications for mortgage refinancing fell by 4% on a seasonally adjusted week and was only 2% higher than a year ago, according to the Association of Mortgage Bankers. Rates were only 5 basis points higher this time last year, but they were lower last fall and early this year, so most borrowers have lower rates than they are today.

“Recent economic uncertainty and the pandemic have kept rates low over the past month, so the refinancing index has hovered around these levels,” said Joel Kahn, MBA’s deputy vice president of economic and industry forecasting.

The number of applications for mortgages to buy a home increased by 1% over the week, but was 16% less than a year ago. Home sales are slowing as potential buyers hit the affordability wall. House prices rose 18.8% in June, the highest annual gain in S&P Case Shiller’s national house price index.

“Buying activity continues to be dominated by higher market price levels, with the average purchase loan now at $ 396,500, the highest average in five weeks,” Kahn said.

Mortgage rates started slightly lower this week, but have not changed much so far. This could change in any direction.

“All lenders will face increased volatility in the coming days due to the release of several important economic reports, which will culminate in Friday’s Big Jobs report,” said Matthew Graham, chief operating officer of Mortgage News Daily.

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