A ill fame for sale on December 17, 2020 in Scituate, Massachusetts.
Matt Stone | MediaNews Group | Getty Images
Mortgage classes fell for the first time in nearly a month, and that lit a fire under current borrowers who may have thought they missed the sailboat on refinancing their loans.
Applications to refinance jumped 11% last week from the previous week, go together to the Mortgage Bankers Association’s seasonally adjusted index. Demand was 59% higher than a year ago. The refinance apportion of mortgage activity increased to 71.4% of total applications from 70.7% the previous week.
The move was spurred by a slump in interest rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan steadies ($510,400 or less) decreased to 2.92% from 2.95%. Points were unchanged at 0.32 for loans with a 20% down payment.
“The one-week complete switch in the recent upswing in rates drove an increase in both conventional and government refinance activity, as borrowers continue to upon in these historically low rates,” said Joel Kan, MBA’s associate vice president of economist and industry forecasting. “MBA’s refinance first finger hit its highest level since March 2020.”
Buyers were less impressed by the drop in rates and likely more disappointed by overheated home prices and a record-low supply of homes for sale.
Mortgage applications to purchase a home were essentially positively for the week, rising just 0.1%. Purchase demand was 16% higher than a year ago, but that annual relation has been shrinking during the past month.
Supply is leanest at the low end of the housing market, and more plentiful at the higher end. That is informing up quite clearly in the amounts borrowers are applying for.
“Average purchase loan amounts in early 2021 continue to position across all loan types, driven by a strong pace of home sales, tight housing inventory and high living quarters price growth,” Kan said. “Conventional, FHA and VA purchase loan sizes all set new survey records last week.”