Last week, mortgage applications stalled across the board as mortgage interest rates spiked. Rates were flat until the end of the week, but the last few days were enough to stall applications in a sensitive market.
Purchase applications were unchanged on the week but still up 11% compared to last year. Today, most buyers are unfazed by high interest rates and home prices, and more concerned with finding a home in a market with dwindling supply.
Refinance applications were down slightly on the week and 16% lower than last year. The lack of refinance applications, however, makes sense because of high mortgage rates. There is no incentive to refinance because the average rate for 30-year FRMs is the highest it has been since 2013.
- Total mortgage application volume was down 0.2% for the week and was 0.8% lower than a year ago
- Purchase applications were unchanged for the week but 11% higher than a year ago
- Refinance applications were down 0.3% for the week and 16% lower than a year ago
- Mortgage applications for government loans, common for entry-level buyers, declined for the week
Total mortgage application volume fell 0.2 percent for the week and was 0.8 percent lower than a year ago, according to the Mortgage Bankers Association’s seasonally adjusted survey.
The stall was equal for refinance and purchase applications, even though the former are far more rate-sensitive. Applications to refinance a home loan fell 0.3 percent last week and were 16 percent lower than a year ago. The refinance share of applications fell to 37.2 percent of all applications, the lowest level since September 2008.
Borrowers really had no incentive to refinance, as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since September 2013.
Mortgage applications to purchase a home were unchanged for the week but 11 percent higher than a year ago. Homebuyers are less concerned about interest rates than they are about finding a home to buy. Demand is incredibly high, and even though more listings are coming on the market this spring, they are not enough to satisfy it. This dynamic is pushing home prices to new record highs and sidelining those buyers who are seeing entry-level homes.
“Applications for government purchase applications, loans more likely to be used by first-time buyers, declined for the week,” said Joel Kan, an MBA economist.
View the original article at CNBC