Rates Fall Across the Board, but Application Volume Continues to Dip
Mortgage rates fell once again this week, dropping to just 2.90% on 30-year, fixed-rate loans. Yet, despite the drop in rates, mortgage activity continued to decline overall. In particular, both purchase and refinance saw a decline over the last week.
According to Sam Khater, Freddie Mac’s Chief Economist, the decline in mortgage rates can be attributed to a dip in the U.S. Treasury yields. However, he cautioned that homebuyers should not expect rates to stay this low forever.
“While mortgage rates tend to follow Treasury yields closely, other factors can be impactful such as the labor markets, which are continuing to improve per last week’s jobs report,” said Khater. “We expect economic growth to gradually drive interest rates higher, but homebuyers and refinance borrowers still have an opportunity to take advantage of 30-year rates that are expected to continue to hover around three percent.”
Still, to this point, the drop in rates has not been enough to increase activity levels back to their previous highs. The Mortgage Bankers Association’s latest weekly survey found that that the purchase index decreased by 1% in the last week on an unadjusted basis and is 14% lower than this time last year. Meanwhile, the refinance index decreased by 2% over the previous week and is 8% lower year-over-year.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, cites the ongoing inventory shortage and rising home prices as major contributors to the drop in purchase activity. On refinance levels, he had this to say:
“The 30-year fixed-rate was 11 basis points lower than the same week a year ago, but many borrowers previously refinanced at even lower rates. Refinance applications have trended lower than 2020 levels for the past four months.”
More in mortgage and housing news
- Fannie Mae’s Home Purchase Sentiment Index shows that consumers are increasingly adament that it is a good time to sell and a bad time to buy a home.
- According to HousingWire, the Department of Justice recently walked backed on a settlement agreement that it had reached with NAR regarding commission rates.
- The most recent MBA survey found that forbearance portfolio volume dropped four basis points to just 3.87%, representing the 18th straight week of declines.
This week in mortgage rates
Mortgage rates fell on all mortgage products this week, with the biggest dip seen on 30-year, fixed-rate loans.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 2.90% (down from 2.98%)
- 15-year, fixed-rate loans: 2.20% (down from 2.26%)
- 5/1 adjustable-rate loans: 2.52% (up from 2.54%)
Make sure to check back here next week for the latest mortgage news.
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