Demand for Refinancing Shrinks, MBA Says
Demand for mortgages plummeted last week, pushing the index tracking mortgage applications down to a seven month low, even as average rates for a 30-year fixed mortgage moderated, a weekly report said Wednesday.
Loan applications decreased 15.8% in the week ending June 12, according to the Mortgage Bankers Association, who have been conducting the survey since 1990. Meantime, the Purchase Index fell 3.5%.
The average contract rate for a 30-year fixed-rate mortgage decreased from 5.57% in the prior week to 5.50%. This is only the third straight week that mortgage rates have been above 5%; as recently as May 15, the average rate was 4.69%.
Over the past four weeks, the index tracking loan applications has fallen by an average of 13.5%, even as the four week moving average for purchases has edged up 0.7%.
With interest rates much higher than in recent weeks, it should be no surprise that the dip in demand was led by a whopping 23.3% drop in refinance activity.
“When rates move in volatile swings like this, it is critical (that) borrowers look for competitive rates â€• competition in this environment keeps mortgage companies honest,” Cameron Findlay, chief economist at LendingTree.com, told Reuters.
Refinance-related loans accounted for 54.1% of all mortgages in the week, compared to 59.4% in the week before. Adjustable-rate mortgages accounted for 4.3% of new applications, compared to 3.4% in the prior week.
It’s worth noting that mortgage rates, despite recent advances, are still comparative low on an historical basis. At this time last year, the average rate was 6.57%.
Leave a Comment
By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...Late-Stage Delinquencies are Surging
Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...Published by the Federal Reserve Bank of San Francisco
It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...