Mortgage applications fall 2% as buyers are slow to start spring shopping season
Lackluster refinancing largely drove the weakness in applications. That part of the mortgage business began dropping off a cliff when interest rates jumped, right after the presidential election. Refinance volume fell 1 percent last week to its lowest level of 2017 and is now down 40 percent compared to the same week one year ago. The refinance share of mortgage activity fell to 46 percent of total applications, the lowest level since November 2008.
“Purchase applications are not increasing as fast as is typically expected at this time of the year,” said Joel Kan, MBA’s associate vice president of industry surveys and forecasting.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $424,100 or less, increased to 4.36 percent from 4.32 percent, with points increasing to 0.35 from 0.34, including the origination fee, for 80 percent loan-to-value-ratio loans.
“Rates were up last week as markets assessed that the Fed might increase rates sooner than expected on the strength of a recent pick-up in inflation readings,” Kan said.
Purchase applications are likely responding less to higher rates and more to lack of supply of homes for sale. Mortgage rates have moved very little since the big November jump, but local markets across the nation are showing far fewer listings now compared to a year ago. While new supply will surely hit the market along with warmer temperatures, it will not be enough, by far, to meet the demand.
Source: cnbc.com
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