Mortgage rates drop, but not enough for overpriced homebuyers
A real estate agent and potential home buyer in Coral Gables, Florida.
Mortgage rates edged down last week, but not enough to start a fire under mortgage demand.
Total mortgage application volume fell 3.1% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances ($ 548,250 or less) decreased to 3.15% from 3.17%, with points dropping from 0, 34 to 0.39 (including origination fees) for loans with a 20% drop in payment.
While rates have fallen slightly, they haven’t been as low as the record highs we experienced last fall, and that’s why demand for refinancing is not responding. Refinancing requests fell 5% last week and 27% less than a year ago. The refinancing share of mortgage activity fell to 60.4% of total applications, from 61.3% the previous week.
“With fewer homeowners able to take advantage of lower rates, the share of refinancing fell to its lowest level since April,” said Joel Kan, associate vice president of economic and industrial forecasting at MBA.
Mortgage applications to buy a home were essentially flat from the previous week and 24% lower than a year ago.
“The sharp annual drop is the result of comparing Memorial Day 2021 to a non-holiday week, as well as the sharp increase in apps seen last May once the lockdowns induced by the pandemic began to lift,” he said. Kan said.
It was also the result of exorbitant house prices. Fewer buyers can now afford a home. This was evident in the average loan size for purchase requisitions. It fell to $ 407,000, below the high of $ 418,000 set in February, but still well above the 2020 average of $ 353,900.