Mortgage rates saw a slight rise, but apparently it was enough to dampen interest in refinances.
That resulted in overall mortgage application volume to fall 5.3% this week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.99% from 3.98%, with points remaining the same at 0.33 (including the origination fee) for loans with a 20% down payment.
MBA’s chief economist, Mike Fratantoni said the 10-Year Treasury yield increased last week amid signs of stronger homebuilding activity and solid consumer spending, leading to a rise in conventional conforming and jumbo 30-year mortgage rates to just under 4 percent.
Consequently, applications to refinance a home loan dropped 5% from the last week but were still 128% higher than a year ago, when rates were 87 basis points higher. The refinance share of mortgage activity increased to 62.6 % of total applications from 62.2% the last week.
Mortgage applications to buy a home fell 5% for the week but were 5% higher compared with the same week one year ago. Interest rates are not the primary reason for a slow down in home sales. There is a serious shortage of existing homes for sale, and that has sidelined would-be buyers, notably at the lower end of the market.
Fratantoni noted: “We are in the slowest time of the year for the purchase market. The increase in construction activity will bolster housing inventories, which should be a positive for purchase volumes going into 2020.”