Purchase Loans, Refis Decline Despite Drop in Rates

Mortgage Weekly Update

Mortgage rates dropped this week, but so did both purchase activity and refinances. 

According to the Mortgage Bankers Association, the average rate on a 30-year fixed loan fell to 3.27%, down from 3.36% the week prior. At the same time, purchase loan applications fell 1%, while refinances declined 5%. 

Joel Kan, MBA’s associate vice president of economic and industry forecasting, attributes the dips to rates seen earlier in the week.

“Purchase and refinance applications declined, with most of the pullback coming earlier in the week when rates were higher,” Kan said. “Treasury yields started last week high — close to the prior week’s level at over 1.77% — before decreasing six basis points.”

On the purchase end, rising home prices are also playing a role.

“The third straight week of declining purchase activity is a sign that rising home prices and tight supply are constraining home sales  — especially in the lower price tiers,” Kan said. “Purchase applications were still above last year’s pandemic-impacted low point, but fell behind the level of activity seen the same week in 2019.” 

Refinancing activity is looking even bleaker. Applications to refinance have fallen in nine of the last 10 weeks, and MBA’s refinancing index is now at its lowest point in over a year. 

“Many borrowers have either already refinanced at lower rates or are unwilling — or unable — to refinance at current rates,” Kan said.

More in mortgage and housing news

  • A new report released by Redfin this week shows that homes listed in the middle of the week sell for about $1,700 more than those listed on the weekend. In some cities, it’s as high as $7,100.
  • The share of mortgage loans in forbearance has fallen to 4.66%, according to MBA. Currently, about 2.3 million homeowners are still on a forbearance plan.

This week in mortgage rates

Mortgage rates fell on all five major loan products this week, with 5/1 ARMs and FHA loans seeing the biggest declines.

Here’s how rates looked for each loan type:

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

Information contained in this article may include links or references to third-party resources or content. Embrace Home Loans does not endorse or guarantee the accuracy of this third-party information. If you follow these links, you will be linking to a third party website not operated by Embrace. We are not responsible for the content of that website and its privacy & security policies may differ from those practiced by Embrace.

​This information is distributed for professional use and is not intended to be shared with, or viewed by, consumers. To the average consumer, the information here may be misleading or exclude important disclosures.

Share this:
Related
By Aly Yale / April 16th, 2021 / Categories: / Tags:

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.