Mortgage demand for homebuyers is increasing, but rates hit their highest level since summer
A sign for sale sits outside a house in Miami Beach.
Carlos Barria | Reuters
Rising mortgage rates do not appear to be dampening demand for home purchases, but are slowing down the volume of refinancing.
Mortgage applications to buy a home were up 3% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. This is the fourth consecutive week of earnings. The volume was 26% higher than a year ago. Year-by-year comparisons, however, are likely to become very important over the next month or so, as home buying stopped at the start of the pandemic a year ago.
“Purchase requests were strong during the week, driven both by households seeking more living space and younger households seeking to own property,” said Joel Kan, MBA economist. . “The average purchase loan balance has risen again, both as house price growth accelerates and as demand for higher balances increases. “
Kan warned that as prices rise and mortgage rates continue to rise, “we may see affordability issues become more severe if new and existing supply does not pick up significantly.”
The average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances ($ 548,250 or less) decreased from 3.26% to 3.36%, for loans with down payment. 20% fund. This is the highest since last July.
“Mortgage rates have risen alongside Treasury yields, as the outlook for the US economy continues to improve amid the faster rollout of vaccines and states easing restrictions related to the pandemic,” Kan said.
The rate is now up more than 50 basis points, or half a percentage point, since the start of the year, reducing potential savings from refinancing.
Mortgage applications to refinance a home loan are down 5% on the week and 13% from a year ago. This is the slowest pace since September, with a drop in conventional and government applications. The refinancing share of mortgage activity fell to 60.9% of total applications, from 62.9% the previous week.