Mortgage Rates Fall, But It Can’t Stop Buyers from Pulling Back
Mortgage rates dropped this week, averaging just 2.98% on 30-year, fixed-rate loans. Still, despite the slide, overall mortgage activity — both on purchases and refinances — declined.
“Economic growth remains steady and is bolstering more segments of the economy,” said Sam Khater, Freddie Mac’s chief economist. “Although low and stable mortgage rates have kept the housing market booming over recent months, a deterioration in affordability and for-sale inventory has led to a market slowdown.”
According to the Mortgage Bankers Association, home purchase applications were down 6% over the week and 17% over the year. Refinances were down 8% and 15%, respectively
Mike Fratantoni, MBA’s senior vice president and chief economist, said it’s the lowest level for mortgage applications in nearly 18 months. Again, rising prices and a lack of inventory are largely to blame.
“The average loan size for total purchase applications increased, indicating that first-time homebuyers — who typically get smaller loans,” Frantantoni said, “are likely getting squeezed out of the market due to the lack of entry-level homes for sale.”
More in mortgage & housing news
- The White House announced it will extend its moratoriums on foreclosures and evictions for at least one more month (until July 31). The deadline to file for mortgage forbearance on federally backed loans was also extended.
- The Federal Housing Finance Agency is expanding its loan modification options for borrowers with Fannie Mae- and Freddie Mac-backed loans. Borrowers will now be able to reduce their loan’s interest rate regardless of their loan-to-value ratio. Previously, borrowers had to have an 80% LTV or higher to qualify.
- The share of mortgage loans still in forbearance fell to 3.91% this week, down from 3.93% the week prior. According to MBA, about 2 million homeowners are in forbearance.
- The Consumer Financial Protection Bureau finalized a new rule that aims to stave off foreclosures once the moratorium ends in July. Under the rule, servicers must have a loss mitigation application from the borrower on hand, confirm that the home is abandoned, and make a reasonable effort to reach the borrower before beginning the foreclosure process.
This week in mortgage rates
Mortgage rates were all over the map this week. Some products saw notable drops, while rates on others actually increased.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 2.98% (down from 3.02%)
- 15-year, fixed-rate loans: 2.26% (down from 2.34%)
- 5/1 adjustable-rate loans: 2.54% (up from 2.53%)
Check back next week for the latest in mortgage news.
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