Interest Rates Drop Again, While Home Prices Continue Rising
Overall mortgage activity was up ever-so-slightly this week, with applications increasing about 1.5% over one week prior. Refinances decreased by 1%, while purchase applications jumped 6%. Refinances were still 152% higher than a year ago, and FHA refinances, specifically, were also up.
Here’s what Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, had to say about it: “Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22%. Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers.“
The big news is that rates dropped again, hitting the low point we saw just two weeks ago. According to Fratantoni, the dip was due to increasing concern over the coronavirus. And given this week’s market activity, we’ll likely see an even more significant change come next week.
“As fears regarding the coronavirus have increased, Treasury yields have dropped to record lows this week amid the ensuing financial market volatility,” Frantantoni said. “Next week’s results will show the impact this drop in Treasuries had on mortgage activity.“
More in Mortgage & Housing News
- The S&P CoreLogic Case-Shiller U.S. National Home Price Index shows home prices saw a 3.8% jump from December 2018 to December 2019. It was the highest year-over-year jump since early 2018. The FHFA’s index shows prices are up even more, rising 5.1% for Q4 2018 to Q4 2019.
- A new report from Altisource shows that nearly a quarter of mortgage origination professionals say artificial intelligence is the most powerful way to stand out in today’s industry. Most originators are planning to expand their product offerings this year, too, with HELOCs, construction loans, and non-QM loans at the top of their lists.
- Redfin’s latest report shows buyer competition is surging across the country. San Francisco buyers apparently see the most competition, with agents saying more than 90% of their recent clients were met with a bidding war. Greenville, South Carolina, is the least competitive market.
This Week’s Mortgage Rates
According to the MBA’s latest Weekly Mortgage Applications Survey, rates were down across the board this week.
Here’s a look at how average rates broke down by loan product:
- All 30-year, fixed-rate loans: 3.73%, 0.27 points
- Jumbo 30-year, fixed-rate loans: 3.72%, 0.23 points
- FHA 30-year, fixed-rate loans: 3.84%, 0.26 points
- 15-year, fixed-rate loans: 3.18%, 0.23 points
- 5/1 ARMs: 3.21%, 0.28 points
Check back next week for our next update on rates and mortgage news.
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