Home Purchases Dip, as Mortgage Rates and Prices Rise
Homebuyers took a break last week, as rates rose and prices continued their upward climb. According to the Mortgage Bankers Association, applications to purchase a home were down 3% from a week ago, marking the second consecutive week of declines.
This happened as the average 30-year mortgage rate rose — from 3.17% to 3.18% — and as average loan sizes increased, indicating a continued rise in home prices.
As Joel Kan, MBA’s associate vice president of economic and industry forecasting, put it, the mortgage market “was a mixed bag of action.”
“Both conventional and government purchase applications declined, but average loan sizes increased for each loan type,” Kan said. “This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity. The higher prices are also affecting the mix of activity, with stronger growth in purchase loans with larger-than-average balances.”
Despite the dip in purchase applications, refinances actually rose for the week — though only by a mere 0.1%. Refinances accounted for 61% of all mortgage applications, up slightly from last week’s 60.6% share.
More in mortgage & housing news
- The share of mortgage loans in forbearance fell to 4.47% of all mortgage loans, according to MBA. An estimated 2.23 million homeowners are still in forbearance.
- Two U.S. representatives have introduced a new bill that would offer up to $15,000 in tax credits for certain first-time homebuyers. To qualify, buyers would need to meet income requirements and buy a home priced no more than 110% of the area’s median purchase price.
- The Consumer Financial Protection Bureau released two reports this week detailing the continued pandemic-related challenges of mortgage borrowers. One report notes that servicer-related complaints are at their highest point in three years.
- New data from Redfin shows that pocket listings are up 67%. Though they still only account for 4% of all homes sold, they’ve been steadily rising every month this year, further eating into the number of homes available on the market.
This week in mortgage rates
Mortgage rates rose on some products and fell on others this week.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 3.18% (up from 3.17%)
- Jumbo loans: 3.31% (up from 3.28%)
- FHA 30-year, fixed-rate loans: 3.13% (up from 3.12%)
- 15-year, fixed-rate loans: 2.54% (down from 2.55%)
- 5/1 adjustable-rate loans: 2.76% (up from 2.59%)
Make sure to check back here next week for the latest mortgage news.
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