A home available for sale is shown on August 12, 2021 in Houston, Texas.
Brandon Bell | Getty Images
Mortgage applications rose 2.2% last week from the previous week, driven by a slight drop in interest rates, according to the Mortgage Bankers Association’s seasonally adjusted index.
Refinancing applications, which are typically most sensitive to weekly rate moves, rose 2% for the week but were still 86% lower than the same week a year ago. Even with interest rates now back from their recent high of 7.16% a month ago, there are very few who can still benefit from refinancing – just 220,000, according to real estate firm Black Knight.
Home mortgage applications rose 3% for the week, but fell 41% from a year earlier. Some potential buyers may be pulling back now because they hear there’s less competition and more bargaining power, but there’s still a shortage of homes for sale and prices haven’t dropped significantly.
Rates are still double what they were at the start of the year, but eased somewhat last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67% from 6.90%, with points increasing to 0.68 for loans with 20% down of 0.56 (including the establishment fee). Method of payment.
“The cut in mortgage rates should improve the purchasing power of potential homebuyers, who have largely been sidelined as mortgage rates have more than doubled over the past year,” Joel Kan, an MBA economist, said in a note. “With rates falling, the share of ARM [adjustable-rate] Applications also fell to 8.8% of loans last week, down from a range of 10% and 12% over the past two months.”
Mortgage rates haven’t moved at all this week as the upcoming Thanksgiving holiday tends to weigh on volumes.
“It’s not like things aren’t moving. They’re just not moving like normal,” said Matthew Graham, chief operating officer of Mortgage News Daily. “Expect things to return closer to normal next week, but the market will continue to wait until December 13th and 14th for the biggest moves.”
That’s when the government releases its next big inflation report and the Federal Reserve announces its next move on interest rates.