Interest Rates Finally Drop, But Home Purchases Are Still Down
It was a mixed bag for the mortgage market this week, according to the latest data from the Mortgage Bankers Association.
On the one hand, rates finally stopped climbing after seven weeks of increases. The average rate on a 30-year fixed-rate mortgage is now 3.33% — down from 3.36% the week prior.
But the slight dip in rates wasn’t enough to stop the slide in applications that lenders have been seeing. Overall mortgage applications saw a 2.2% dip this week, while refinances alone fell 3%.
The drop in refinance activity isn’t too surprising. According to Black Knight, only 11.1 million homeowners could shave at least 75 basis points from their rate by refinancing today — the smallest share since early last year.
As Joel Kan, MBA’s associate vice president, put it: “Higher mortgage rates continue to shut down refinance activity, as the pool of borrowers who can benefit from a refinance further shrinks.”
Purchase activity is down, too, though not as much. That drop is largely due to tight housing supply and rising home prices.
“Record-low inventory is pushing home-price growth at double the rate from a year ago, and even above the 10% growth rates seen in 2005,” Kan said. “The housing market is in desperate need of more inventory to cool price growth and preserve affordability.
More in mortgage and housing news
- Newly anointed HUD Secretary Marcia Fudge announced this week that FHA mortgage insurance premiums will not be increasing this year. “Our number one priority is helping families keep their homes and remain safe as we work toward an equitable recovery,” she said.
- The share of mortgage loans in forbearance fell below 5% for the first time in a year. According to MBA, 4.96% of all mortgage loans are currently in forbearance, amounting to about 2.5 million homeowners nationwide.
- In the last four weeks, home prices have jumped 16% — an all-time high, according to Redfin. More than a third of all homes sold above list price.
This week in mortgage rates
Mortgage rates dropped on all loan types, with the exception of 5/1 ARMs. These mortgage products saw a slight increase in rates over last week.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 3.33% (down from 3.36%)
- Jumbo loans: 3.34% (down from 3.40%)
- FHA 30-year, fixed-rate loans: 3.29% (down from 3.35%)
- 15-year, fixed-rate loans: 2.71% (down from 2.72%)
- 5/1 adjustable-rate loans: 2.85% (up from 2.79%)
Make sure to check back here next week for the latest mortgage news.
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