Mortgage Activity Drops Thanks to Waning Refis

Mortgage Interest Rates Drop

Overall mortgage activity was down this week, thanks wholly to a steep drop in refinances. According to the latest data from the Mortgage Bankers Association, refinance applications were down 9% over last week.

Purchase loan activity, on the other hand, was up 5% for the week and 18% over the year. It was the seventh straight week that purchase applications have increased (and the seventh consecutive week of falling refi activity, too).

The news is certainly good for the housing market, but according to Joel Kan, MBA’s associate vice president of economic and industry forecasting, any optimism should be tempered.

“The pent-up demand from homebuyers returning to the market continues to support a recovery from the weekly declines observed earlier this spring,” Kan said. “However, there are still many households affected by the widespread job losses and current economic downturn. High unemployment and low housing supply may restrain a more meaningful rebound in purchase applications in the coming months.”

As for rates, the market saw another record-setting low this week. According to MBA, the average interest rate on a 30-year, fixed-rate loan dipped to 3.37%. Rates on jumbo loans, 15-year loans, and 5/1 ARMs decreased, too. FHA loans were the only segment to see an increase (though it was only a mere 0.05%). 

More in Mortgage and Housing News

  • The share of mortgage loans in forbearance hit 8.46% this week. About 4.2 million homeowners have now entered a forbearance plan. 
  • Fannie Mae announced new requirements for self-employed borrowers during the COVID-19 pandemic. According to the GSE, lenders will need to determine if the borrower’s business “is stable and has a reasonable expectation of continuance” in order to issue a loan.
  • Many larger cities saw the rent-vs-buy ratio shrink during the first quarter of the year. According to data from Realtor.com, the monthly cost to purchase a median home came in at $1,584, while renting came in just under at $1,391. In 19% of cities, buying a home is more affordable than renting one. 

The Week in Mortgage Rates

Interest rates dropped across most loan products, with the exception of FHA loans. Here’s a quick look at how they shook out:

  • All 30-year, fixed-rate loans: 3.37%, 0.30 points
  • Jumbo 30-year, fixed-rate loans: 3.66%, 0.30 points
  • FHA 30-year, fixed-rate loans: 3.46%, 0.23 points
  • 15-year, fixed-rate loans: 2.85%, 0.27  points
  • 5/1 ARMs: 3.05%, 0.25 points

Mortgage rates change daily. Check back next week to see where rates stand.

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