Homebuyers are taking advantage of lower mortgage rates and a slow summer for sellers, and that is driving mortgage applications higher. Total mortgage application volume rose 2.0 % last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 69% higher than the same week one year ago, when interest rates were much higher. The week’s results included an adjustment for the Labor Day holiday.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 3.82 percent from 3.87 percent, with points increasing to 0.44 from 0.34 (including the origination fee) for loans with a 20% down payment.
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Low rates, combined with more moderate home prices and more desperate sellers, are all bringing buyers back to the market. Mortgage applications to purchase a home increased 5% for the week and were 9% higher than the same week one year ago. More homes usually come on the market after the Labor Day holiday, marking an end of the summer slump. Some agents say the spring was particularly slow, so a lot of that demand may have been pushed forward to the fall.
Dallas real estate agent Kelley McMahon said she is seeing a stronger fall but a pickier buyer.
“I feel like there’s more inventory than there has been in the past. Usually in the fall I’m a little slower, but I have not slowed down at all,” said McMahon. “I feel like there are a lot of homes hitting market, but if they’re not priced right they’re gonna sit for a bit.”
The lowest mortgage rates in about three years did not push applications to refinance a home loan much higher, at least for the week. They were up just 0.4% compared with the previous week. They were still 169% higher than the same week one year ago, when the average rate on the 30-year fixed was 102 basis points higher, at 4.84%.
“Refinances were essentially unchanged, but August overall was the strongest month of activity so far in 2019,” said Joel Kan, an MBA economist.
Mortgage rates fell throughout much of last week, and some lenders say that is precisely when potential refinancers hold off, hoping they will go even lower. By the end of the week, however, rates popped higher, and they are now at the highest level in over a month.
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“This most recent break from long-term lows has been far more threatening with 2 of the past 4 business days bringing the biggest single-day jumps in several months,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “As a result, the average lender is now back to offering rates last seen in early August.”
The sudden move higher may reinvigorate the refinance market this week, as borrowers fear the recent lows may be over for a while.
Source: cnbc.com | Original Link