Despite another drop in interest rates, demand for mortgage refinancing and purchase declined last week, with total mortgage application volume down 4.8% from the previous week, according to the Mortgage Bankers Association.
Mortgage rates at historic lows are apparently not as impressive as they once were, probably because rates have been so low for so long.
The average contract interest rate for 30-year fixed-rate mortgages with compliant loan balances of up to $ 510,400 dropped to 3.05% from 3.1
Home loan refinancing applications, which are usually sensitive to weekly rate movements, still fell 7% for the week, although they were still 52% higher than a year ago, according to the index. seasonally adjusted.
“There are indications that refinancing rates are not falling to the same extent as rates for home purchase loans, and this may explain the decline in refinancing last week,” said Joel Kan, an MBA economist. “Many lenders are still operating at full capacity and facing operational challenges, ultimately limiting the number of applications they are able to accept.”
Mortgage applications for home purchases fell by 2% during the week and were 22% more than a year ago. This is a slightly lower annual gain than the previous week. Housing demand has been incredibly strong in recent months, as the pent-up demand from the pandemic-stricken spring has combined with a consequent desire for larger suburban homes.
However, supply is much lower than demand, and this is igniting a fire under house prices, which are rising double-digit in some markets. Most of the sales activity is now at the higher end of the market, where there is more supply.
“Even as pent-up demand has declined since the beginning of the year, there continues to be action in the higher price ranges, with the average loan balance remaining close to an all-time high,” added Kan.