A sign of ‘Open House’ is displayed when potential home buyers arrive at a property in Columbus, Ohio.
Ty Wright | Bloomberg | Getty Images
Record-low mortgage rates may now be a thing of the past.
Now, a few weeks of rising rates, the demand for refinancing has degenerated. Last week, it dropped its total weekly mortgage application volume by 1.9%, according to the seasonally adjusted index of the Mortgage Bankers Association.
The average interest rate for 30-year fixed-rate mortgages with corresponding loan balances ($ 510,400 or less) rose from 2.88% to 2.92%, with points rising to 0.37 from 0.33 (including the original fee) for loans with 20% lower payment. The rate was 95 basis points higher a year ago.
The average rate of the 15-year fixed rose to 2.48% for the first time in seven weeks.
As higher rates now offer less potential savings, applications to refinance a home loan fell by 5% for the week, but were 87% higher than a year ago. The annual comparison was just over 100% just last week.
“Market expectations for a larger-than-expected fiscal relief package, which is expected to boost economic growth and lower unemployment, have seen Treasury yields rise over the past two weeks,” said Joel Kan, deputy president of economic and industrial forecasting. , said. “After a boom in refinancing after the holidays, higher rates have kicked off refinancing demand.”
However, the demand from home buyers has increased despite the higher rates. Mortgage applications to buy a home rose by 3% for the week and were 15% higher than a year ago. The coronavirus pandemic has fueled demand for larger, suburban homes. Despite the deployment of the vaccine, demand does not appear to be declining. The biggest obstacle for home buyers is currently high prices and record low stock homes for sale.
“Homebuyers will continue to look for new, larger homes in early 2021,” Kan said. “The average loan size for purchase loans rose to $ 384,000, the second highest level in the survey,” dating back to 1990.
The incoming Biden administration is ready to do several homes in the housing market that benefit home buyers and builders. However, mortgage rates started flat this week as traders are likely to wait for the first major economic policy announcements before they start.