Purchase Loans Increase; Refis Slide as Rates Jump Again

Mortgage Weekly Update

Once again, mortgage rates are up, and overall activity is down. According to the Mortgage Bankers Association, mortgage applications were down 1.3% this week. 

Refinancing activity dipped 5% and is now 43% lower than it was a year ago. The drop was primarily caused by rising rates, which just hit their highest point since last July. The average rate on a 30-year, fixed-rate loan is 3.26% — up from 3.23% the week prior.

“Signs of faster economic growth, an improving job market and increased vaccine distribution are pushing rates higher,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The run-up in mortgage rates continues to cool demand for refinance applications. Activity declined last week for the fourth time in five weeks.”    

Fortunately, purchase activity is another story. Purchase loan applications were up 7% for the week despite the uptick in rates.

“With the spring buying season at the doorstep, the purchase market had its strongest showing in four weeks, with gains in both conventional and government applications. Overall activity was 2.4 percent higher than a year ago, and loan sizes moderated for the second straight week — potentially a sign that more first-time buyers are entering the market.”  

More in mortgage and housing news

  • The share of mortgage loans in forbearance dropped again this week, this time to 5.2% of all loans. According to MBA, that’s about 2.6 million homeowners still on forbearance plans.
  • Data from Realtor.com shows that homes are selling six days faster than they were one year ago. Total listings are down 50%, while new listings are down 27%. The short supply and high demand have pushed prices up 14% over the same time period.
  • According to Redfin, interest in vacation towns and suburbs has exploded since the pandemic began. In El Dorado County — a suburban area near Sacramento — prices are up 36% and the average days on the market dropped 50 days.

This week in mortgage rates

Mortgage rates rose or held steady on most loan types, with the exception of 5/1 ARMs. These mortgages saw a notable drop in rates 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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