Purchase Activity Falls, While Mortgage Rates and Refis See Uptick

Mortgage Weekly Update

For the second week in a row, overall mortgage activity increased, this time rising 1.2% over the week. Unfortunately, purchase loans decreased 4%, likely due to low inventory and rising home prices.

“There continues to be strong demand for buying a home, but persistent supply shortages are constraining purchase activity, and building material shortages and higher costs are making it more difficult to increase supply,” said Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association. “As a result, home prices and average purchase loan balances continue to rise, with the average purchase application reaching $411,400 — the highest since February.”

Mortgage rates also increased for the week across all five major loan products. Still, refinances jumped 4% for the week, accounting for 63.3% of all loan activity. That’s up from 61.3% the week prior.

“Despite the 30-year fixed rate rising to 3.15 percent, applications for conventional and VA refinances increased,” Kan said. “Ongoing volatility in refinance applications is likely if rates continue to oscillate around current levels.”

More in mortgage & housing news

  • According to the latest data from the U.S. Census Bureau and HUD, construction activity has started to decline. Housing starts are down 9.5% from March, and housing competitions dropped 4.4%. Building permits, fortunately, held steady.
  • Applications to purchase a new home increased 30.8% over the year in April but were down 9% from March. The majority of these purchases were financed with conventional loans (nearly 73%), with FHA loans covering about 16%.
  • Two senators have introduced a new bill that would enable remote online notarizations across the countrt. The bill is called the SECURE Act (Securing and Enabling Commerce Using Remote and Electronic Notarization). 
  • The share of mortgage loans in forbearance has fallen to 4.22% of all loans, according to MBA. It marks the 11th straight week of declining forbearances. About 2.1 million homeowners are still on a forbearance plan.

This week in mortgage rates

Mortgage rates increased across all loan products this week, though only slightly.

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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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.