A slight drop in mortgage rates last week did not lead to much mortgage activity. Total mortgage application volume—for refinances and home purchases—mostly stayed flat last week, dropping by a mere 0.8 percent compared to the previous week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday.
The MBA reported the average for a 30-year fixed-rate mortgage dropped to 4.33 percent last week from 4.46 percent the week prior.
Mortgage applications are now 11 percent lower than the same week one year ago, mostly due to a drop in refinancing applications.
Refinance applications saw a 3 percent decline last week and are down nearly 26 percent from a year ago, even when mortgage rates were higher. The decrease on the refinance side of business may prompt more mortgage bankers to turn their attention more to the purchase-side of mortgages. As such, lenders may be more tempted to ease tight credit conditions as they try to better compete for business, CNBC reports.
Meanwhile, applications for home purchases last week eeked out a 1 percent gain and are 4 percent higher than a year ago. Industry analysts say that purchase applications could be much stronger if there were higher inventories of homes available for sale.
Demand is high but supply remains low. Real estate professionals reported a 26 percent spike in the number of home tour requests in February, according to a monthly survey conducted by Redfin.
“The only factor holding back sales this spring is supply,” says Nela Richardson, Redfin’s chief economist. “Limited inventory, particularly for starter homes, has put a crimp in the 2017 market. We expect to see more listings hit the market this spring, but there will still not be enough inventory to match homebuyer demand.”
Source: “Mortgage Applications Stay Flat Even as Rates Drop to Lowest in Three Weeks,” CNBC (March 29, 2017)