Prospective home buyers arrive to view a home for sale in Dunlap, Illinois.
Daniel Acker | Bloomberg | Getty Images
Borrowers pulled out of the mortgage market last week as higher interest rates weakened a recent refinancing revival.
The average contract rate for 30-year fixed-rate mortgages with corresponding loan balances ($ 548,250 or less) increased from 2.99% to 3.06%, with points falling from 0.30 to 0.34 (including the initial fee) for loans with a decrease increased by 20% payment.
“Mortgage rates followed a general surge in government bond yields last week that started higher with the strong July job report before slowing down on weaker consumer sentiment and concerns over rising Covid-19 cases,” said Joel Kan, Associate Vice President of the Mortgage Bankers Association of Economic and Industry Forecasting.
Home loan refinancing applications, which are very interest rate sensitive, decreased 5% last week from the previous week and were 8% lower than a year ago according to the seasonally adjusted index of the MBA. Mortgage rates are a little lower than last August, but not as low as they were last fall when there was a mini refi boom. As a result, the pool of homeowners who could benefit from refinancing has shrunk.
Home purchase mortgage applications, which are less prone to weekly rate changes, decreased 1% in the week and were 19% lower than a year ago. Homebuyers have been pulling out for a few weeks as affordability declines and the supply of home for sale improves only marginally.
“Despite a weekly second-tier decline, average loan volumes remain close to record highs. This is a lingering sign that sales prices are still up, fueled by intense competition that is leading to accelerated home price growth, ”Kan said.