After staying stable two weeks ago, mortgage rates resumed their withdrawal last week, but demand for mortgage loans did not increase.
The volume of application growth fell 3.1% for the week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was 62% higher than the same week a year ago, when interest rates were significantly higher and refinancing activity was extremely low.
The average contract rate for 30-year fixed rate mortgages with matching loan balance ($ 484,350 or less) decreased to 3.87% from 3.94%, with points falling to 0.34 from 0.38 (including origination fee ) for loans with a 20% down payment. This rate was 93 basis points higher than a year ago.
"Ongoing trade tensions between the US and China led to unstable, yet declining government rates last week, leading to the 30-year fixed-rate mortgage falling to 3.87%, the lowest level since November 201[ads1]6," says Joel Kan, MBA's assistant vice president. of economic and industrial forecasts.
Refinancing applications, which have been strong over the past month, fell for the second week, down 7% from last week. The refinancing volume was 152% higher than a year ago, but the annual comparison has shrunk over the past three weeks. Most of those who could benefit from a refinance and who would go through the process may already have done so.
Mortgage companies to buy a home, which has been less reactive to lower rates, increased by 4% for the week and was 5% higher than a year ago.
"Consumers continue to trade at these lower interest rates, but market volatility is likely to cause some borrowers to pause refinancing and purchasing decisions," Kan said.
The demand for purchases usually increases more when interest rates dip as much as they have, but house prices are so high and the supply of affordable homes so low that potential buyers withdraw. Home prices had shrunk for much of this year, but began to strengthen in July, according to several reports. It coincided with the fact that the supply of homes for sale also fell.
Loan rates continued to slide Tuesday, falling to the lowest level in three years, according to Mortgage News Daily, which runs daily interest rates. This followed another sell-off in the stock market as new duty rates came into force. Markets are now looking forward to Friday's monthly employment numbers to get more clues to the health of the US economy.