Mortgage Charges Proceed a Downward Spiral
Freddie Mac’s latest Primary Mortgage Market Survey (PMMS) shows that the 30-year fixed-rate mortgage (FRM) averaged 2.78% weekly, 10 points less than last week’s average of 2.88%. A year ago, the 30-year-old FRM averaged 3.01% at this point.
Again this week, the 15-year-old FRM averaged 2.12% with an average 0.7 point value, compared to last week when it averaged 2.22%. A year ago, the 15-year-old FRM averaged 2.54% at this point.
“Concerns about the Delta variant and the general course of the pandemic are undoubtedly affecting economic growth,” said Sam Khater, Freddie Mac’s chief economist. “As the economy continues to recover, government bond yields have fallen and mortgage rates have followed suit. Unfortunately, many homebuyers cannot take advantage of the low prices due to low inventory and high prices. “
The rise in unemployment this week was one of the factors slowing economic growth, as the US Department of Labor announced that the week ending on the 17th was the previous week’s revised level. The level of the previous week was corrected upwards by 8,000 from 360,000 to 368,000.
For the week ended July 16, 2021, the Mortgage Bankers Association (MBA) reported that mortgage applications were down 4.0% from the previous week. And while rates continue to drop to all-time lows, record asking prices continue to scare affordability off.
A recent analysis by Redfin found that asking prices for newly listed homes were up 12% from the same point in time a year ago to a median of $ 361,700, a 0.5% increase over the four-week period ended Jan. July corresponds.
The housing stock rebounded slightly in June as the latest Zillow property market report concluded that after a long period of strong sellers’ favor, the market may be on the way to realignment. The housing stock improved by 3.1% in June, after an increase of 3.9% in May, as the total stock is now 29.2% below the 2020 level. Inventories remain low, however, and demand remains strong, propelling home appreciation to new record highs in both monthly and annual growth.
The bidding wars for the limited offer continue as cash offers above the bid price continue to discourage home buyers from jumping in to take advantage of below 3% interest. Redfin found that nearly a third (30%) of home purchases in the US in 2021 were paid for entirely in cash, up from 25.3% in all of 2020, the largest proportion since 2014 when 30.6% of the total Houses bought entirely with cash were cash register.
And while home purchases are in decline, refis remain strong as the MBA reported that the refinancing rate of mortgage activity rose to 64.9% of total applications, up from 64.1% the previous week.
“These falling interest rates offer homeowners yet another opportunity to refinance to save money on their monthly mortgage payments,” said Khater.