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Mortgage demand sinks even as rates drop

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People are waiting to visit a home for sale in Floral Park, Nassau County, New York.

Wang Ying | Xinhua News Agency | Getty Images

Mortgage rates have fallen for the second straight week, but demand from homeowners and potential buyers has not rebounded.

Mortgage banking association data show that interest rates fell 10 basis points last week, down 24 basis points in the last two weeks, but total mortgage demand fell 5.4% from a week ago. This week’s results include holiday adjustments that take into account the early closure of Friday before Independence Day.

The average contract interest rate for 30-year fixed rate mortgages ($ 647,200 or less) with a matching loan balance has dropped from 5.84% to 5.74%, and for 20% down payment loans from 0.64 including the origination fee. Points have increased to 0.65. payment.

“Housing mortgage rates have fallen for the second straight week as yields on the Ministry of Finance have fallen due to growing concerns about a slowdown and rising risk of recession,” said Joel Kang, MBA’s vice president of economic and industrial forecasting. “.

These concerns manifested themselves in mortgage refinancing applications, down 8% that week, down 78% from the same week a year ago. The refinancing share of mortgage activity fell from 30.3% last week to 29.6% of the total application.

Home purchase applications also fell weekly and yearly, down 4% and 17%, respectively.

“Interest rates are still significantly higher than they were a year ago, so home purchase and refinancing applications continue to be curtailed. Purchasing activity is hampered by ongoing affordable challenges and low inventories.” Said Kan.

Realtor.com released its June Housing Report last week. This shows that inventories for sale have recovered, rising at the fastest annual pace in history, up 18.7% year-on-year. However, compared to June 2019, homes for sale are still 53.2% less.

Daniel Hale, Chief Economist at Realtor.com, said: Buyers have not yet seen a quick sale of homes and a meaningful remedy from record highs. “

According to the Mortgage Banking Association, the average mortgage loan amount is $ 405,200, down from $ 413,500 for the week ending June 24th.

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