A decrease in refinancing activity—due to the uptick in mortgage rates since November 2016—has curtailed overall mortgage application activity in recent weeks. It’s again what was behind the 1.6 percent drop in total mortgage applications last week, the Mortgage Bankers Association reported Wednesday.
Applications for refinances dropped 4 percent last week and are now 33 percent below a year ago.
Meanwhile, applications for home purchases are performing much stronger, rising 1 percent last week and now 8 percent higher than a year ago. Housing analysts say that purchase activity could be much higher, if it weren’t for high prices and a tight supply of homes for-sale in many markets.
“Home prices continue to grow at a torrid pace so far in 2017, and these gains are likely to continue well into the future,” says Frank Martell, president and CEO of CoreLogic. “Home prices are at peak levels in many major markets.”
Mortgage rates haven’t fluctuated too much over the past few weeks, giving borrowers a temporary reprieve. The average 30-year fixed-rate mortgage was 4.34 percent last week, up slightly from 4.33 percent the week prior.
“Markets appeared to hit pause last week, with little new information emerging about upcoming administrative or legislative policy changes,” says Lynn Fisher, the MBA’s vice president of research and economics.
Source: “Mortgage Applications Fall 1.6%, But Average Loan Size Hits Record High,” CNBC (April 5, 2017)