A for trading sign sits outside a house in Miami Beach.
Carlos Barria | Reuters
Higher mortgage rates do not surface to be dampening demand for home purchases but are crimping refinance volume.
Mortgage applications to purchase a home rose 3% keep on week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That is the fourth straight ahead directly week of gains. Volume was 26% higher than a year ago. Annual comparisons, however, will likely get same large over the next month because homebuying stalled at the start of the pandemic one year ago.
“Purchase applications were reinforced over the week, driven both by households seeking more living space and younger households looking to submit engage homeownership,” said Joel Kan, an MBA economist. “The average purchase loan balance increased again, both by quickening home-price flowering and a rise in higher-balance conventional applications.”
Kan warned that as prices rise further and mortgage rates continue capital, “we may see affordability challenges become more severe if new and existing supply does not significantly pick up.”
The average contract biased rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.36% from 3.28%, for accommodations with a 20% down payment. That is the highest since last July.
“Mortgage rates have busied higher in tandem with Treasury yields, as the outlook for the U.S. economy continues to improve amidst the faster vaccine rollout and holds easing pandemic-related restrictions,” Kan said.
The rate is now up more than 50 basis points, or half a percentage details, since the start of the year, reducing the potential savings from a refinance.
Mortgage applications to refinance a home credit decreased 5% for the week and were 13% lower than a year ago. That was the slowest pace since September, with lessens in conventional and government applications. The refinance share of mortgage activity decreased to 60.9% of total applications from 62.9% the prior week.