Purchase Loans, Refis Decline Despite Drop in Rates
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:
- Conforming 30-year, fixed-rate loans: 3.27% (down from 3.36%)
- Jumbo loans: 3.35% (up from 3.41%)
- FHA 30-year, fixed-rate loans: 3.24% (up from 3.36%)
- 15-year, fixed-rate loans: 2.67% (up from 2.74%)
- 5/1 adjustable-rate loans: 2.60% (up from 2.92%)
Make sure to check back here next week for the latest mortgage news.
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