As I wrote in last week’s post, the Mortgage Bankers Association (MBA) announced a slight increase in mortgage application volume. Yield went up a bit, as total applications fell by 0.5%. This decline coincides with the housing market experiencing uneven activity, especially along refinance and purchase origination lines.
Refinance applications to refinance a home loan fell by 4% this week. They’re still 19% higher than they were this time last year. More good news—mortgage purchase applications just rose by 2%. Together, this spike marks a historic 25% increase from the same week last year. The refinance share of mortgage activity took a beating. That number fell to 45.3% of total applications, a decrease from 46.1% last week.
The MBA’s report highlighted that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose slightly to 6.69%, up from 6.68%. For these mortgages, the points remained at 0.60—even after this increase. This rate is with the inclusion of the origination fee for loans with an 80 percent LTV. Further, the average purchase loan size grew to $433,400, which is at its highest point in two months.
Joel Kan, an economist at the MBA, noted that prospective buyers do not seem to be significantly affected by current rates.
“Prospective buyers appear to be less sensitive to rates at these levels and are more active, bolstered by more inventory and cooling home-price growth in many parts of the country.” – Joel Kan, an MBA economist.
The current trends in mortgage applications coincide with a notable political development. President Donald Trump recently fired Federal Reserve Governor Lisa Cook. This decision has raised the broader question of where interest rates are headed from here. Cook’s successor is expected to advocate for a faster pace of interest rate reductions.
Mid-week we haven’t seen much movement in mortgage rates, or really much of any volatility at all this week reported so far. This cash cushion provides an oasis of stability in a sea of stormy political predilection that has the potential global economic driver written all over it.