Thianchai Sitthikongsak | Moment | fake images
Mortgage demand is struggling to cope with what appears to be another spike in interest rates. Homebuyers in particular are pulling back.
Total mortgage application volume increased 3.7% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That was all due to refinancing activity.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.80% from 6.78%, and points decreased to 0.59 from 0.65 ( including origination fee) for loans with a 20% down payment. pay.
That weekly average doesn’t fully reflect a massive rate hike last Friday after a much higher-than-expected monthly employment reading from the U.S. Department of Labor for January. The average 30-year fixed bond rate rose 29 basis points after the data was released, according to Mortgage News Daily, and another 12 basis points on Monday after a manufacturing report also came in higher than expected. Together, those two jumps represented the third-largest increase in mortgage rates since March 2020.
Even with lower rates for most of last week, mortgage applications to purchase a home fell 1% compared to the previous week and were 19% lower than the same week a year ago.
“Purchasing activity has been strong in early 2024 compared to the last quarter of 2023. However, activity remains weaker than a year ago due to low housing supply,” said Joel Kan, MBA economist, it’s a statement.
Applications to refinance a home loan increased 12% for the week and were 1% higher than a year ago. While the weekly jump may seem like a lot, the base is so low that even a small amount of demand generates a large weekly percentage change. The refinancing share of mortgage activity increased to 35.4% of total applications from 34.2% the previous week.
Mortgage rates retreated slightly on Tuesday, but the increase was an adjustment to surprisingly strong economic data, according to Matthew Graham, chief operating officer of Mortgage News Daily.
“Many Fed spokespeople have confirmed this during this time. They have been reasonably unified in saying they still expect rate cuts in 2024, but not as quickly as the market expected at the beginning of last week,” he said. aggregate.
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