Home Purchases, Refis Dip as Rates Keep Rising
What happened in the mortgage market this week? It’s a story we’ve heard several times over the past few months: Mortgage rates rose, refinances dropped, and home purchase activity fell as well.
According to the Mortgage Bankers Association, overall mortgage applications were down 5.1% this week, as the average rate on 30-year loans hit their highest point since last summer. The current rate — 3.36% — drove both purchases and refinances down 5%.
It was the fifth straight week that refinancing activity has declined. It’s now at levels 20% lower than last year (though purchase applications are still up 51% annually).
“The return of rates to the highest level since last June contributed to a slowdown in applications for both purchases and refinances,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The rapidly recovering economy and improving job market are generating sizeable home buying demand, but activity in recent weeks is constrained by quicker home price growth and extremely low inventory.”
More in mortgage and housing news
- The share of mortgage loans in forbearance has now dropped to 4.96%. According to MBA, around 2.5 million homeowners are still on a forbearance plan.
- The Consumer Financial Protection Bureau proposed guidelines it hopes will stave off an impending wave of foreclosures once mortgage forbearance options end. Chief among these proposals is a “foreclosure review rule,” which would require a special pre-foreclosure review of all mortgage loans exiting forbearance. It would also push all foreclosure starts back until January 1, 2022. The CFPB will solicit public input on the rule, as well as the others it has proposed.
- Homes are now selling at the fastest pace on record, according to Redfin. Nearly 60% of all listings are under contract within two weeks, and 47% have an accepted offer within just one week of going live (the highest share on record).
This week in mortgage rates
Mortgage rates rose on all mortgage products this week, with the biggest jumps seen on FHA and jumbo loans.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 3.36% (up from 3.33%)
- Jumbo loans: 3.41% (up from 3.34%)
- FHA 30-year, fixed-rate loans: 3.36% (up from 3.29%)
- 15-year, fixed-rate loans: 2.74% (up from 2.71%)
- 5/1 adjustable-rate loans: 2.92% (up from 2.85%)
Make sure to check back here next week for the latest mortgage news.
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