Plenty of things are scaring potential homebuyers today, but apparently interest rates aren’t one of them.
Mortgage application volume eked out a 0.6 percent gain on a seasonally adjusted basis last week from the previous week, according to the Mortgage Bankers Association. The tally includes an adjustment for the Columbus Day holiday. Applications are now 18.5 percent higher than a year ago.
Mortgage applications to purchase a home increased 3 percent from the previous week, seasonally adjusted and are now 13 percent higher than the same week one year ago. While home sales have been slowing since August, there are more mortgage-dependent buyers in the market today from a year ago. That may account for the increase in applications. Investors, who largely use cash, have been slowing their purchases this year overall. Homebuying has slowed as price gains accelerate and consumer confidence in housing wanes.
A monthly survey of homebuilder sentiment dropped in October, with builders reporting less buyer traffic and fewer sales. Expectations for future sales, however, are still rising, as the supply of homes for sale continues to shrink amid rising buyer demand.
Refinance applications, which are more interest rate-sensitive, fell 1 percent from the previous week, seasonally adjusted, but are still up 22.4 percent from a year ago, when rates were slightly higher.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since June, to 3.73 percent, from 3.68 percent, with points increasing to 0.36 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio loans.
“Refinance applications dropped to the lowest level since the week of the Brexit vote, as mortgage rates reached their highest level since then,” said Michael Fratantoni, chief economist for the MBA.
Mortgage rates did begin to move slightly lower at the beginning of this week, but experts are not convinced the recent rise is over, given how anxious bond markets appear to be. With political uncertainty ahead domestically, and international markets still in flux, volatility is to be expected.
“It’s tempting to conclude that the recent trend toward higher rates is over,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “But that would be a premature conclusion until we see how markets react to Thursday’s announcement from the European Central Bank. Bottom line, the past few days have been helpful, but everything could still change.”
The refinance share of mortgage activity decreased to 61.5 percent of total applications from 62.4 percent the previous week. The adjustable-rate mortgage share of activity remained unchanged at 4.1 percent of total applications.
source”cnbc”
