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, prompted by a slight drop in interest rates, according to the Mortgage Bankers Association̵[ads1]7;s seasonally adjusted index.
Refinancing applications, which are usually most sensitive to weekly interest rate movements, rose 2% for the week but were still 86% lower than the same week a year ago. Even with interest rates now back from a high of 7.16% a month ago, precious few could still benefit from a refinance – just 220,000, according to real estate data firm Black Knight.
Mortgage applications rose 3% for the week, but were down 41% from a year ago. Some potential buyers may now venture back in, hearing that there is less competition and more bargaining power, but there is still a shortage of homes for sale and prices have not dropped significantly.
Prices are still twice as high as at the beginning of the year, but they fell somewhat last week. The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) fell to 6.67% from 6.90%, with points increasing to 0.68 from 0.56 (including the origination fee) for loans with 20 % decrease. payment.
“The reduction in mortgage rates should improve the purchasing power of potential home buyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, an MBA economist, said in a release. “With the decline in prices, ARM stock [adjustable-rate] of 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 that things aren’t moving. They’re just not moving like normal,” said Matthew Graham, CEO of Mortgage News Daily. “Expect things to get closer to normal next week, but for the market to continue to wait until December 13 and 14 for the biggest moves.”
This is when the government releases its next major report on inflation and the Federal Reserve announces its next move on interest rates.