Last week, there was no change at all in mortgage rates, which are still close to a recent high. More prospective homebuyers were forced out of the market as a result of rising housing prices.
The seasonally adjusted indicator from the Mortgage Bankers Association shows that the overall volume of mortgage applications decreased by 1.8% last week compared to the week before.
Mortgage Rate Trends and Home Buying Activity
For loans with a 20% down payment, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan sums ($726,200 or less) stayed constant at 6.87%, with points dropping from 0.66 to 0.65 (including the origination fee).
Recently, that rate went beyond 7%, and it hasn’t really decreased since then.
As a result, mortgage applications for home purchases decreased by 3% for the week and were 23% lower than they had been during the same week last year, when interest rates were in the mid-5% range.
A 10% decrease in FHA applications contributed to the slowdown in buying activity.
Lower-income purchasers choose the Federal Housing Administration because it offers loans with little or no down payment. Clearly, they are finding the market to be less and less affordable.
According to MBA economist Joel Kan, the decline in FHA purchase applications caused the average purchase loan size to rise to $432,700, its highest level since the end of this May, indicating that more activity is now taking place at the top end of the market.
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Borrowers Benefit from Low Interest Rates, Refinancing Unchanged
Refinancing requests for mortgages were largely unchanged for the week and 30% lower than during the same week last year.
Today’s borrowers typically have interest rates that are far lower than the current rate, so they would not gain anything from a refinance.
Instead of losing the rate on their original loan, people who want to borrow money from their homes go for second, home equity loans.
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