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Boston Real Estate Good News on Mortgages

Boston Real Estate Borrowers are clearly used to hearing that mortgage rates were low last week’s rates didn’t disappoint.

  • Mortgage application volume fell 2.5% last week from the previous week, according to the Mortgage Bankers Association.
  • Mortgage applications to purchase a home fell 5% last week.
  • Applications to refinance a home loan fell 1% for the week, despite the lowest interest rates since February.

Lower mortgage rates are not prompting homeowners or potential homebuyers to contact their lenders, as other obstacles stand in their way.

Boston Real Estate Mortgage Bad News

Total mortgage application volume fell 2.5% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The decline came even though the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.17% from 3.20%, with points decreasing to 0.30 from 0.36 (including the origination fee) for loans with a 20% down payment. That is the lowest rate since the end of February.

Applications to refinance a home loan, which are highly sensitive to weekly rate moves, still fell 1% for the week and were 18% lower than one year ago. The rate on the 30-year fixed was 26 basis points higher a year ago, but rates were at record lows last fall, far lower than the current rate.

“Even with a few weeks of lower rates, most borrowers have likely already refinanced, which is why activity has decreased in seven of the last eight weeks,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Mortgage applications to purchase a home fell 5% for the week and were 34% higher than a year ago. The annual comparison, however, means little now because the housing market ground to a halt at this time last year, when the pandemic lockdown was in place. It then rebounded dramatically in the summer and is only now beginning to lose steam again.

Homebuyers are butting up against bidding wars in the competition for the record-low supply of homes for sale. That is causing home prices to skyrocket at the fastest pace in 15 years. Even today’s slightly lower interest rates are not enough to make up for the ever-increasing cost of buying a home. Purchase applications have fallen for four of the last five weeks.

“While buyers were eager in early 2021, sellers have been holding back,” said Danielle Hale, chief economist for realtor.com. “We’ve seen 200,000 fewer new sellers than we would typically see in January and February and an additional 117,000 new sellers were missing compared to the typical year in March. These trends have resulted in extraordinarily frustrating trends for buyers, especially first-timers.”

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Bad News

The volume of applications for mortgages decreased 0.7% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 decreased to 3% from 3.01%, with points decreasing to 0.32 from 0.37 (including the origination fee) for loans with a 20% down payment.

Applications to refinance a home, which are most sensitive to weekly interest rate movements, fell 0.3% for the week but were 44% higher than a year ago. While that annual comparison may seem like a lot, it had been around 100% higher earlier this year. The new record low was also such a tiny move that it clearly had little impact.

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