Rates Hit New Low, Sending Refis Up
Purchase loan activity dropped last week, falling 5% over the week prior. Refinancing activity, on the other hand, jumped 2%. It’s now 89% higher than this time last year.
The bump in refinancing is likely due to low mortgage rates, which hit a record low once again. According to the Mortgage Bankers Association, rates on 30-year, 15-year, and FHA loans are now at their lowest points in history.
All in all, refinance applications accounted for 72% of all mortgage activity for the week.
According to Joel Kan, associate vice president of economic and industry forecasting for MBA, purchase activity is still strong, despite the slight downtick this week.
“The purchase market is also poised to finish 2020 on a strong note,” Kan said. “Applications fell slightly last week but were around 3 percent higher than the two weeks leading up to Thanksgiving. Reversing the recent trend, there was also a shift in the composition of purchase applications, with an increase in government loans pushing the average loan balance lower.”
More in mortgage and housing news
- Lending standards loosened slightly in November. According to MBA, mortgage credit availability was up 0.7% for the month. When availability increases, it indicates loosening credit standards. When it rises, it means standards are getting tighter. Standards appear to have loosened most on conventional and jumbo loans.
- The share of mortgage loans in forbearance held steady this week. MBA’s data shows 5.54% of all loans are now in forbearance — about 2.8 million homeowners nationwide.
- CoreLogic released its housing and mortgage outlook this week. According to the report, interest rates on 30-year, fixed-rate loans should remain under 3% as we head into 2021. They’ll average 3.2% over the next three years. Home prices, on the other hand, will increase — though at a slower pace than we saw this year. CoreLogic projects prices will jump by 2.1% in 2021.
This week in mortgage rates
Mortgage rates dropped on all mortgage products this week.
Here’s how rates looked for each loan type:
- Conforming 30-year, fixed-rate loans: 2.90%, 0.35 points
- Jumbo 30-year, fixed-rate loans: 3.20%, 0.28 points
- FHA 30-year, fixed-rate loans: 2.97%, 0.40 points
- 15-year, fixed-rate loans: 2.51%, 0.35 points
- 5/1 adjustable-rate loans: 2.60%, 0.40 points
Make sure to check back here next week for the latest news on interest rates.
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