Mortgage Apps Fall Thanks to Rising FHA Loan Rates
Mortgage activity slipped slightly this week, dropping 0.8% from last week. Refinancing applications decreased by 0.4%, while purchase loan applications fell 2%. Both rates remained higher than last year (up 121% and 21%, respectively).
According to Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, the dip is likely due to rising FHA loan rates, which saw FHA refinances fall 18% in just one week. Overall interest in purchasing a home seemed to wane, too.
“Homebuyers stepped back slightly, and there was a larger drop in purchase application volume for FHA, VA, and USDA loans,” Fratantoni said. “This trend, along with the fact that average loan sizes are increasing, indicate that prospective first-time buyers are being impacted more by the rising economic stress caused by the resurgence in COVID-19 cases, as well as the uncertainty on how the next round of government support will take shape.”
The decreases in activity come as average 30-year mortgage rates hover at record lows. According to MBA’s data, the average rate on a 30-year, fixed-rate loan this week was 3.2% — holding steady from the week prior.
More in Mortgage and Housing News
- The share of mortgages in forbearance fell again this week. According to MBA, 7.74% of all mortgage loans are on a forbearance plan, down from 7.8% last week. It’s the sixth straight week of declines.
- The latest S&P CoreLogic Case-Shiller Home Price Index came out this week, showing home prices rose 4.5% in May — down just slightly from the rate seen in April. The highest home price gains were in Phoenix, Seattle, and Tampa, Fla.
- The U.S. homeownership rate hit its highest point in more than a decade, according to the latest data from the Census Bureau. Just under 68% of U.S. homes are now owner-occupied, versus just 65% last quarter. The rate hasn’t been this high since Q3 2008.
This Week in Mortgage Rates
Mortgage rates either increased slightly or held steady this week, with FHA loans seeing the biggest jump.
Here’s a look at how rates shook out:
- All 30-year, fixed-rate loans: 3.20%, 0.37 points
- Jumbo 30-year, fixed-rate loans: 3.52%, 0.30 points
- FHA 30-year, fixed-rate loans: 3.27%, 0.35 points
- 15-year, fixed-rate loans: 2.76%, 0.36 points
- 5/1 ARMs: 2.89%, 0.11 points
Check back here next week for the most up-to-date mortgage rates.
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