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Real estate news: Mortgage applications drop

Real estate news: Mortgage applications drop: KEY POINTS
  • Mortgage applications decreased 1.8% last week, according to the Mortgage Bankers Association’s seasonally adjusted index, falling to the lowest level since the beginning of 2020.  
  • Both refinance and purchase applications took a hit. Mortgage applications to refinance a home dropped 2% for the week and were 8% lower than a year ago.
  • The decline came even as mortgage rates fell.
Mortgage demand fell for the second week in a row, as low real estate inventory and high home prices continue to weigh on the Boston real estate housing market.

Real Estate Loan Applications Drop

Mortgage applications decreased 1.8% last week, according to the Mortgage Bankers Association’s seasonally adjusted index, falling to the lowest level since the beginning of 2020, before the coronavirus pandemic started to take a toll on the economy.

Both refinance and purchase applications took a hit, even as mortgage rates slipped.

Mortgage applications to refinance a home dropped 2% for the week and were 8% lower than a year ago. Refinance applications have trended lower than 2020 levels for the past four months, according to the MBA.

Home purchase applications dropped 1% for the week and came in 14% lower than a year ago.  

Real Estate Mortgage Interest Rates

Falling mortgage rates didn’t spur demand. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) dropped 5 basis points to 3.15, with points decreasing to 0.38 from 0.39 (including the origination fee) for loans with a 20% down payment.

Mortgage rates loosely follow the yield of the 10-year Treasury. Mortgage rates dipped despite good economic news, Kan added.

“Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market. However, rates continued to move lower – especially late in the week,” he said. “The 30-year fixed rate was 11 basis points lower than the same week a year ago, but many borrowers previously refinanced at even lower rates.”

Are mortgage applications up or down in 2021?

Mortgage applications decreased 1.8% last week, according to the Mortgage Bankers Association’s seasonally adjusted index, falling to the lowest level since the beginning of 2020.

How are downtown Boston mortgage rates determined?

Mortgage rates loosely follow the yield of the 10-year Treasury. Mortgage rates dipped despite good economic news

How are home purchase and refinance mortgage applications doing in 2021?

Both refinance and purchase applications took a hit. Mortgage applications to refinance a home dropped 2% for the week and were 8% lower than a year ago.

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Mortgage applications for new-home purchases fell 9% on a monthly basis and 5.9% on a year-over-year basis in May, the Mortgage Bankers Association reported, citing its Builder Application Survey

“Mortgage applications to purchase a new home decreased in May for the second straight month, while the average Loan size, at $384,000, increased for the fourth consecutive month and reached a new survey high,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.”     

The seasonally adjusted annualized pace of sales dropped 3.8% in May on a monthly basis to 741,000 units. The rate of sales reached a survey high of 927,000 units in October 2020, the MBA said in a press release

On an unadjusted basis, the association estimated that there were 68,000 new home sales in May, down 5.6% from 72,000 sales in April.  

By product type, conventional loans composed 73.9% of loan applications in the month, while Federal Housing Administration loans comprised 14.8%, and Veterans Administration loans accounted for 10.4%. The average loan size for new homes rose to $384,323 in May from $377,434 in April.

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The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes loans for home purchases and refinancing’s, fell 14.4 percent to 713.6 in the week ended Nov. 12, the lowest since the July 9 week.

Borrowing costs on 30-year fixed-rate mortgages surged to a two-month high of 4.46 percent in the week, up from 4.28 percent in the previous period. The rate last month reached 4.21 percent, the lowest level in the survey, which has been conducted weekly since 1990.

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