Mortgage Applications Drop as Rates Hit Survey Low

Mortgage Interest Rates Drop

Mortgage activity ticked down this week, with total applications dropping 4.8%, according to the Mortgage Bankers Association. Purchase loan activity was actually up 2% for the week, but refinances dipped 7%. They’re still 52% higher than one year ago.

The average rate on 30-year mortgage loans dropped as well, falling to 3.05% — down from 3.10% last week. It’s the lowest point in MBA survey history.

According to Joel Kan, associate vice president of economic and industry forecasting, rates may not be that low on refinances, which could be causing the dip in applications.

“There are indications that refinance rates are not decreasing to the same extent as rates for home purchase loans, and that could explain last week’s decline in refinances,” Kan said. “Many lenders are still operating at full capacity and working through operational challenges, ultimately limiting the number of applications they are able to accept.”

Refinances accounted for 63.3% of all loan applications for the week. That’s down from 64.3% the week prior.

More in mortgage and housing news

  • The share of mortgage loans in forbearance dropped once again. According to MBA, 6.93% of homeowners are currently in forbearance — or about 3.4 million. 
  • Home prices rose at the fastest pace in two years this July, according to CoreLogic. They rose 4.78% from July 2019 to July 2020. Home prices rose the most in Phoenix (9.2%), Seattle (7%), and Charlotte, North Carolina (6%).
  • A new report from Realtor.com shows that inventory problems are worse in the country’s suburbs. Competition is stiffer, too. Online home shoppers are up 56.4% in suburban areas.
  • According to a new analysis from Zillow, a homeowner who bought last August could save more than $80 per month and nearly $30,000 across a 30-year loan term by refinancing today.

The week in mortgage rates

Interest rates decreased on all loan types this week, with the exception of 15-year, fixed-rate loans. Those saw a slight, .01% increase from last week.

Here’s how rates looked for each one:

  • Conforming 30-year, fixed-rate loans: 3.05%, 0.52 points
  • Jumbo 30-year, fixed-rate loans: 3.33%, 0.39 points
  • FHA 30-year, fixed-rate loans: 3.15%, 0.43 points
  • 15-year, fixed-rate loans: 2.65%, 0.49 points
  • 5/1 adjustable-rate mortgages: 2.95%, 0.55 points

Check back here next week for the latest mortgage rates.

Information contained in this article may include links or references to third-party resources or content. Embrace Home Loans does not endorse or guarantee the accuracy of this third-party information. If you follow these links, you will be linking to a third party website not operated by Embrace. We are not responsible for the content of that website and its privacy & security policies may differ from those practiced by Embrace.

​This information is distributed for professional use and is not intended to be shared with, or viewed by, consumers. To the average consumer, the information here may be misleading or exclude important disclosures.

Share this:
Related
By Aly Yale / October 2nd, 2020 / Categories: , , / Tags:

Aly Yale

Aly J. Yale is a mortgage and real estate writer based in Houston. Connect with her at AlyJYale.com or on Twitter at @AlyJwriter.