Mortgage rates rose again last week, leading to homeowners and potential home buyers withdrawing their loans.
The total mortgage application volume decreased by 5.1% compared to the previous week, according to the seasonally adjusted index of the mortgage lending bankers association.
The average interest rate for 30-year fixed-rate mortgages with corresponding loan balances ($ 548,250 or less) rose to 3.36% from 3.33%, with points rising to 0.43 from 0.39 (with including the original fee) for loans with 20% lower payment.
As a result, applications to refinance a home loan, which is the most sensitive to weekly interest rate movements, fell by 5% for the week and were 20% lower than a year ago. This is the slowest pace since last year in June.
“Refinancing applications declined for the fifth consecutive week, but there was a gain in VA lending activity,” said Joel Kan, an MBA economist. “Overall, refinancing demand has declined, by volume by more than 30% over the past ten weeks.”
Mortgage applications to buy a home fell by 5% for the week and were 51% higher than a year ago. That annual comparison will be very large over the next few months, as the housing market almost completely stopped last year at this time, when the pandemic shut down the economy. It recovered dramatically at the beginning of the summer.
“The rapidly recovering economy and the improvement in the labor market are raising significant demand for home buying, but activity in recent weeks has been limited by faster growth in house prices and extremely low inventory,” Kan said.
Mortgage rates moved lower this week after refusing to break through the recent highs. This could bode well for homebuyers in the coming weeks.
“Evidence for a supportive shift in the tariff environment is starting to grow,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “The shift may be overwhelming or short-lived, true, but almost everything is better than the first quarter of 2021. Simply drifting sideways at current levels would be a big win.”