Mortgage interest rates took a sizable downturn last week, but it wasn’t enough for homebuyers to refinance. Overall mortgage applications fell 0.5% and refinance applications fell 2% on the week.
The average interest rate for a 30-year FRM is still more than 50 basis points above a year ago, so more than half of homeowners today have mortgages with rates below 4%. Rather than refinance, homeowners are choosing to take out a second mortgage.
- Total mortgage application volume was down 0.5% on the week and 13.5% year-over-year
- Refinance application volume was down 2% on the week and 28% year-over-year
- The average interest rate for 30-year FRMs fell to 4.79%, down from 4.84% the week prior
Total mortgage application volume decreased 0.5 percent on a seasonally adjusted basis compared with the previous week, according to the Mortgage Bankers Association. Volume was 13.5 percent lower than the same week one year ago.
Applications to refinance a home mortgage fell 2 percent for the week and were 28 percent lower than the same week one year ago, when interest rates were lower. The refinance share of mortgage activity decreased to 37.2 percent of total applications from 37.6 percent the previous week.
More than half of all homeowners with a mortgage today have rates below 4 percent, according to CoreLogic. Even those homeowners who want to tap some of the newfound equity in their home, given the sharp rise in home values, are more likely to take out a second loan rather than refinance to a higher interest rate. Home equity lines of credit are increasing as refinances decrease.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.79 percent last week from 4.84 percent the previous week.
View the original article at CNBC