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Mortgage refinancing has fallen to its slowest pace since September 2020, with declines in both conventional and government applications, according to the Mortgage Bankers Association weekly application survey.
Why? The economy with low interest rates is diluting as rates rise.
The average rate for 30-year fixed-rate mortgages with outstanding loan balances ($ 548,250 or less) increased to 3.36% from 3.28%, an increase of 50 basis points since the beginning of the year. As a result, refinancing incentives have been canceled for many borrowers.
“Mortgage rates have increased along with Treasury yields, as the outlook for the U.S. economy continues to improve amid the faster launch of the vaccine and states easing pandemic-related restrictions,” said the vice president. MBA Economic and Industrial Forecasting associate, Joel Kan, in a demonstration.
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The MBA composite market index, a measure of the volume of mortgage loan applications, decreased 2.5% on a seasonally adjusted basis from the previous week. Without adjustments, the index fell 2% compared to the previous week.
Mortgage requests to refinance a home decreased by 5% from the previous week and were 13% lower compared to the same week last year, according to the MBA refinancing index. Conventional refinancing orders decreased 4.7% from the previous week, while government refinancing orders decreased 6.5% from the previous week. The refinancing share of mortgage activity decreased to 60.9% of total orders, compared with 62.9% the previous week.
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Still, demand for home buyers remains strong, with mortgage orders to buy a home rising 3% last week from the previous week, according to the seasonally adjusted purchase index of the MBA, marking the fourth consecutive week of earnings. When not adjusted, the purchasing index increased by 3% over the previous week and was 26% higher than in the same week of the previous year.
“Purchase orders were strong throughout the week, driven both by families looking for more space to live and by younger families looking to enter the property,” added Kan. – balance conventional applications. “
The average loan size for purchase mortgage applications in the previous week was $ 409,300, while the average loan size for refinanced mortgage applications in the previous week was $ 284,200.
However, Kan warned that the inadequate housing stock continues to push up house prices.
“As the growth in house prices and mortgage rates continue this upward trend, we can see the accessibility challenges become more serious if the new and existing offer does not increase significantly,” he said.
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The latest MBA data comes when sales of existing homes fell 6.6% in February, to a seasonally adjusted annual rate of 6.22 million units, according to the National Association of Realtors, while the home stock hit a record low of 1.03 million units at the end of February, down 29.5% year-on-year compared to 1.46 million units.
The average selling price of existing homes has risen to $ 313,000, an increase of 15.8% compared to $ 270,400 a year ago. The average price of an existing single-family home was $ 317,100 in February, an increase of 16.2% year-over-year, and the price of the existing condominium was $ 280,500 in February, an increase of 12.3% year-over-year. Sales of homes priced over $ 1 million were 81% higher compared to the previous year, while homes priced between $ 100,000 and $ 250,000 fell 11%.
Regionally, sales of existing homes plunged 14.4% in the Midwest, 11.5% in the North, 6.1% in the South and 4.6% in the West. Average prices were $ 231,800 in the Midwest, an increase of 14.2% year-on-year; $ 356,000 in the Northeast, an increase of 20.5% year-on-year; $ 271,200 in the South, an increase of 13.6% year-on-year; and $ 493,300 in the West, an increase of 20.6% over the previous year.