Weekly mortgage refinancing demand drops as interest rates stagnate
A “For Sale” sign in front of a house in West Palm Beach, Florida on April 7, 2021.
Marco Bello | Bloomberg | Getty Images
An extended period of low mortgage rates is wreaking havoc in the refinancing market, as most eligible borrowers have already gone through the process.
The average contractual interest rate for 30-year fixed-rate mortgages with compliant loan balances ($ 548,250 or less) remained unchanged at 3.03% last week, with points falling from 0.29 to 0.34 (including set-up costs) for loans with a 20% drop. Payment.
As a result, mortgage refinancing requests fell 4% for the week, seasonally adjusted, and were only 2% higher than a year ago, the Mortgage Bankers Association reported. . Rates were only 5 basis points higher at the same time last year, but were lower last fall and early this year, so a large chunk of borrowers have rates lower than today.
“Recent uncertainties around the economy and the pandemic have kept rates low over the past month, which is why the refinancing index has hovered around these levels,” said Joel Kan, associate vice president MBA economic and industrial forecasts.
Mortgage applications for the purchase of a home were up 1% for the week, but were 16% lower than a year ago. Home sales have slowed as potential buyers hit a wall of affordability. Home prices rose 18.8% in June, a record annual gain, on the S&P Case Shiller National Home Price Index.
“Home buying activity continues to be dominated by higher market price levels, with the average purchase loan amount now standing at $ 396,500, the highest average in five weeks.” Kan said.
Mortgage rates started this week slightly down but still haven’t moved much. It could be about to change both ways.
“All lenders will face increased volatility in the coming days due to the release of several important economic reports leading up to Friday’s Big Jobs report,” said Matthew Graham, chief operating officer at Mortgage News Daily.