Mortgage applications in the US rose 4% as Mortgage rates rose to an 8-month high. The average 30-year fixed-rate mortgages increased to 3.30% from 3.23%. Refinance share of mortgage activity decreased to 62.2% of total applications from 63.3%.
From the U.S. Mortgage Bankers Association for the week ending 22 October 2021
- Applications to purchase a home +0.3% v -6.3% prior
- Purchase index 275.6 vs 266.2 prior
- Refinancing index 2,763.8 vs 2,807.9 prior
- 30-year mortgage rate 3.30% vs 3.23% prior
Refinance demand fell 2% week to week, seasonally adjusted. Volume was 26% lower than the same week one year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.30% from 3.23%, with points decreasing to 0.34 from 0.35 (including the origination fee) for loans with a 20% down payment. That rate was 30 basis points lower one year ago.
Refinance demand fell 2% week to week, seasonally adjusted. Volume was 26% lower than the same week one year ago. The refinance share of mortgage activity decreased to 62.2% of total applications from 63.3% the previous week.
“The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers’ incentive to refinance,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting, in a release. “Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time home buyers are accounting for a declining share of activity,” added Kan.
Mortgage rates edged down slightly to start this week, but that could just be a brief reprieve before next week. The Federal Reserve is widely expected to announce next Wednesday that it will taper its purchases of mortgage-backed bonds. That should send rates even higher.
From The TradersCommunity News Desk