Mortgage charges at six-month low, and refinances shoot up
A real estate agent stands in the door when Giovani and Nicole Quiroz of Brooklyn, New York attend an open house in West Hempstead, New York.
Raychel Brightman | Newsday LLC | News day | Getty Images
The popular 30-year fixed-rate mortgage fell to its lowest level since February last week, and the 15-year fixed-rate mortgage hit a record low. That sent borrowers to their lenders to save money on their monthly payments.
Home loan refinance requests rose 9% last week from the previous week, according to the Mortgage Bankers Association seasonally adjusted index. They were still 10% lower than a year ago. The refinancing share of mortgage activities rose from 64.9% in the previous week to 67.2% of the total applications.
The average contract rate for 30-year fixed-rate mortgages with corresponding loan balances ($ 548,250 or less) decreased from 3.11% to 3.01%, with the points going from 0.43 to 0.34 (including the lending fee) for loans with a decrease of Payment has decreased by 20%. The average interest rate for the 15-year fixed interest rate reached a new low of 2.36%.
“10-year government bond yields fell last week as investors were concerned about the rising number of Covid-19 cases and the downside risks to the current economic recovery,” said Joel Kan, MBA vice president of economists and industry forecasting.
Home purchase mortgage applications fell 2% in the week and were 18% lower than a year ago. That was the second week of declines and the lowest level since May 2020. In the last three months, the number of purchase requests has now been lower on an annual basis.
“Potential buyers continue to be deterred by extremely high property prices and increased competition,” said Kan.
Mortgage rates continued to fall earlier this week, but all eyes and ears are now on the Federal Reserve’s statement on Wednesday at 2 p.m. ET. Mortgage rates do not follow the federal funds rate, but are loosely tied to the yield on 10-year US Treasuries and are based on demand for mortgage-backed bonds. The Fed bought these bonds but announced that it would limit their purchases. If the Fed’s comments suggest the buying will take longer than expected, mortgage rates could continue to fall.
“On the flip side, if the Fed says the recent spike in Covid cases was on its radar and that the reduction targets for late 2021 have not been reconsidered, interest rates could definitely go higher,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.