Mortgage Rates Fall, Sending Purchase and Refis Upward

Mortgage Weekly Update

Mortgage rates hit their lowest point since February this week, and borrowers responded. According to the Mortgage Bankers Association, total mortgage applications were up 2.1% over the week prior.

Purchase loans saw a 1% increase over the week and were 13% higher than one year ago. Refinances were 3% higher for the week and accounted for 61.3% of all loans.

“The decline in rates helped the refinance index reach its highest level in eight weeks, driven by a 4 percent increase in conventional refinances,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Additionally, refinance loan balances increased for the fourth straight week, an indication that higher-balance borrowers acted to take quick advantage of lower rates.”

According to Kan, home buying demand is strong, but inventory shortages are holding sales and purchase applications back.

“The first week of May was also strong for the purchase market,” Kan said. “Applications were up 13% from a year ago, which was around the time the housing market awakened from the pandemic-induced stall in activity. Most markets this spring continue to see robust demand, but activity continues to be constrained by insufficient inventory levels, as well as homebuilder challenges related to the ongoing shortages and price increases for building materials.”  

More in mortgage & housing news

  • Mortgages were easier to come by in April, according to MBA. The trade group’s Mortgage Credit Availability Index apparently rose 2.2% for the month, indicating that lender standards are loosening.
  • Fannie Mae has announced that its new RefiNow option will be available starting June 5. The program is designed for lower-income borrowers and guarantees a 50 basis point rate cut and a $50 reduction in monthly payment. 
  • The share of mortgage loans in forbearance has dropped to 4.36% of all loans, down from 4.47% the week prior. According to MBA, about 2.2 million homeowners are still on a forbearance plan.

This week in mortgage rates

Mortgage rates fell across all loan products this week.

Here’s how rates looked for each loan type:

Make sure to check back here next week for the latest mortgage news.

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