Mortgage Rates Drop Again, Sending Home Purchases, Refis Upward
Mortgage rates continued their decline this week, this time averaging a mere 2.88% on 30-year, fixed-rate loans. It’s the third consecutive week of dips, according to Freddie Mac.
“Since their peak at 3.18% in April, mortgage rates have declined by thirty basis points,” said Sam Khater, chief economist for Freddie Mac. “While this decline is not large, it provides modest relief to borrowers who are purchasing in a market with strong home appreciation and scant inventory.”
The dip caused mortgage applications to jump 16% over the week, according to the Mortgage Bankers Association. Applications to purchase a home rose 8% over the week (seasonally adjusted), while refinance applications jumped a whopping 20%. Both measures are still markedly lower than one year ago (down 29% on both counts).
“Overall applications climbed last week, driven heavily by increased refinancing as rates dipped again,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. According to Kan, recent dips in rates are due to down-trending Treasury yields, which have investors “concerned about the COVID-19 variant and slowing economic growth.”
Another interesting point to note? Average loan sizes dipped to their lowest level since January this week. It could be a sign that prices are leveling off and more inventory is starting to hit the market. According to Realtor.com, new listings were up 5% this week — the 13th straight week of increases.
More in mortgage & housing news
- It got harder to get a mortgage in June, according to MBA. Overall mortgage credit availability fell 8.5% for the month, indicating lending standards are tightening. Standards tightened most on conventional and conforming loans.
- Bidding wars are finally slowing down. According to Redfin, 65% of offers written by Redfin agents in June were met with competition. That’s down from 72% in May, but still higher than a year ago.
- The share of mortgages in forbearance fell to just 3.76% of all loans last week. According to MBA, 1.9 million homeowners are still on a forbearance plan.
This week in mortgage rates
Mortgage rates were a mixed bag this week, falling on 30-year, fixed-rate and 5/1 ARM loans, but rising slightly on 15-year, fixed-rate mortgages.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 2.88% (down from 2.90%)
- 15-year, fixed-rate loans: 2.22% (up from 2.20%)
- 5/1 adjustable-rate loans: 2.47% (up from 2.52%)
Make sure to check back here next week for the latest mortgage news.
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