Rates Hit Another Low, But Mortgage Applications Drop
Despite mortgage rates reaching yet another all-time low last week, demand for mortgage loans is waning. According to the most recent survey from the Mortgage Bankers Association, overall mortgage applications decreased 0.5% for the week. It’s the sixth time in seventh weeks that demand has dropped.
The dip is likely due to dwindling inventory, which has pushed home prices higher (and further out of reach) for many buyers.
“Inadequate housing supply is putting upward pressure on home prices and is impacting affordability — especially for first-time buyers and lower-income buyers,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The trend in larger average loan application sizes and growth in loan amounts points to the continued rise in home prices, as well as the strength in the upper end of the market.”
But it’s not all doom and gloom. While this week’s numbers certainly indicate a slight slowdown, application volume is still markedly higher than this time last year. Purchase loan activity is up 16.5%, while refinances have increased 67%.
Altogether, refinances accounted for a whopping 70% of all mortgage applications for the week — up from 6.87% the week prior.
More in mortgage and housing news
- The number of mortgage loans in forbearance fell again this week, dropping from 5.83% of all loans to 5.67%. About 2.8 million homeowners are still on forbearance plans.
- Fannie Mae’s Home Purchase Sentiment Index shows that both buyers and sellers were more optimistic about the housing market in October. Sixty percent of respondents said it’s a good time to buy a house, while 59% said the same about selling. The two shares have increased by 9 and 6 percentage points, respectively.
- The FHA proposed letting lenders use private flood insurance programs rather than the National Flood Insurance Program currently allowed. “Our proposal would expand the options for obtaining flood insurance, rather than continuing to lock in borrowers to one federal option without any ability to comparison shop,” the administration’s secretary for housing said.
This week in mortgage rates
Mortgage rates either dropped or held steady on all loan types this week.
Here’s how rates looked for each loan product:
- Conforming 30-year, fixed-rate loans: 2.98%, 0.35 points
- Jumbo 30-year, fixed-rate loans: 3.13%, 0.31 points
- FHA 30-year, fixed-rate loans: 3.08%, 0.37 points
- 15-year, fixed-rate loans: 2.55%, 0.37 points
- 5/1 adjustable-rate loans: 2.79%, 0.42 points
Make sure to check back here next week for the latest on interest rates.
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