Rates Hit New Low, While Mortgage Activity Stalls Out
Mortgage activity dropped again, this time falling 1.8% over the week. Refinance applications were down 2%, while applications to purchase a home fell 1%. On both counts, activity is still much higher than one year ago.
According to Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association, this was the second blip for activity in as many weeks — likely a sign that low housing inventory is starting to derail demand.
“After two months of strong growth, purchase applications declined for the second week in a row,” Kan said. “The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers’ options. The average purchase application loan size increased to a record high in our survey — more proof that tight inventory conditions are leading to faster price growth.”
It’s not all bad news, though. The average rate on 30-year, fixed-rate loans fell to 3.29% this week, down from 3.3% last week and another record low for MBA’s survey. Further rate drops may be in the future.
“Investors are contemplating the risks of the recent resurgence of COVID-19 cases to the labor market and economy, and Treasury rates and mortgage rates are moving lower as a result,” Kan explained.
More in Housing and Mortgage News
- The number of mortgage loans in forbearance fell again this week, dropping to 8.48% of all loans. That’s about 4.2 million homeowners.
- The Federal Housing Finance Agency released its latest House Price Index, which showed home prices up 5.5% for the month of April. Prices rose the most in the Mountain Census division (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming), where they jumped 6.8% over one year prior.
- CoreLogic released its annual Storm Surge Report, which revealed over 7 million homes are at risk this hurricane season. Damage could amount to nearly $2 trillion.
This Week in Mortgage Rates
Rates either dropped or held steady across all loan types this week.
Here’s how they shook out for each type of loan:
- All 30-year, fixed-rate loans: 3.29%, 0.36 points
- Jumbo 30-year, fixed-rate loans: 3.59%, 0.31 points
- FHA 30-year, fixed-rate loans: 3.35%, 0.36 points
- 15-year, fixed-rate loans: 2.81%, 0.40 points
- 5/1 ARMs: 3.04%, -0.03 points
Be sure to check back next week to see where rates go next.
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