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Homebuyer demand for purchase loans fell last week for a fifth straight week as this month’s spike in interest rates slowed, but most mortgage rates continued to hover above 7%, according to the Mortgage Bankers Association’s weekly survey of lenders. .
MBA Weekly App Survey Data showed that home loan requests from homebuyers last week fell 5% on a seasonally adjusted basis from the previous week and 12% from the same period last year. Refinancing requests fell 7% week over week and 1% year over year.
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A recent MBA survey of builders showed that applications to purchase new homes were up 19% in January compared with the same period last year. But MBA chief economist Mike Fratantoni said the lack of existing homes for sale in many markets is discouraging potential homebuyers.
Mike Fratantoni
“This disparity continues to highlight the lack of existing inventory as a major constraint on increased purchases,” Fratantoni said in a note. statement. “However, mortgage rates above 7 per cent certainly don’t help.”
Home sales are off to a strong start in 2024 as homebuyers took advantage of falling home prices in November and December.
Applications for home-purchase mortgages increased each week in the first three weeks of January, but demand for home-purchase loans has contracted over the past five weeks since mortgage rates rebounded.
Mortgage rates rebound
The 30-year fixed-rate mortgage rate was 6.93% on Tuesday, up 43 basis points from the recent low of 6.50% on Feb. 1, according to loan lock-in data tracked. best blue.
Although interest rates have been rising this month, they still have a long way to go to surpass the 2023 peak of 7.83% set on October 25.
While economists believe rates will eventually fall back, the recent strength of the economy may mean they won’t fall as quickly or as severely as some hope.
Another uncertainty for mortgage rates is whether Congress can agree on a spending bill avoid government shutdownThe first four of 12 temporary spending bills to keep the government running are set to expire after March 1.
Economists at Pantheon Macroeconomics said in the February 28 “U.S. Economic Monitor” that if investors lose interest in U.S. government debt, it could cause bond yields to surge.because mortgage rates Track 10-Year Treasury Bond Yields What’s more, failure to find a long-term solution could result in mortgage rates rising again.
“Domestic investors have become relatively weary of the continued dysfunction in Congress and numbed by repetition, but this is causing confusion and nervousness among investors outside the U.S.,” Pantheon economists said. “Is this a sign of the Treasury market? “A serious question depends on a range of factors, including this week’s outcome. A long-term (continued resolution) next year will allow everyone to settle down, while endless mini-crimes could ultimately lead to significant yield premiums.”
A strong economy could slow the decline in mortgage rates
source: Fannie Mae and Mortgage Bankers Association Forecast, February 2024.
A record number of Americans expected mortgage rates to fall in the coming year hit a record high in January, mortgage giant Fannie Mae’s monthly survey of consumers showed.
In January, Fannie Mae economists expected the average interest rate on 30-year fixed-rate loans to fall to 5.8% in the final three months of 2024 and to 5.5% in the fourth quarter of 2025.
Economists at the mortgage giant said in their latest forecast that they still expect mortgage rates to fall back below 6% this year, but there won’t be as much room for further declines in 2025. Last week, Fannie Mae projected that interest rates on 30-year fixed-rate loans would slip to an average of 5.9% in the final three months of 2024, before remaining flat to an average of 5.7% in the fourth quarter of 2025.
MBA economists predicted in a Feb. 20 forecast that mortgage rates would not drop below 6% in 2024, but would fall sharply next year, to an average of 5.5% by the fourth quarter of 2025.
For the week ending February 23, MBA reported average interest rates for the following types of loans:
- 30-year fixed rate Qualified Mortgage (loan balances of $766,550 or less), the average interest rate was 7.04%, down from 7.06% the previous week. While the points for an 80% loan-to-value (LTV) loan increased from 0.66 to 0.67 (including the origination fee), the effective interest rate also dropped to 7.23%.
- 30-year fixed rate interest rate jumbo mortgage (loan balances over $766,550) averaged 7.20%, up from 7.16% the previous week. Points for an 80% LTV loan increased from 0.45 (including origination fee) to 0.57, and the effective interest rate also increased.
- 30-year fixed rate Federal Housing Administration MortgageThe average interest rate was 6.86%, down from 6.91% the previous week. Points for an 80% LTV loan dropped from 1.03 (including origination fee) to 0.99, and the effective interest rate also dropped.
- The price is 15-year fixed-rate mortgage The average was 6.70%, up from 6.61% the previous week. The effective interest rate also increased, although points for an 80% LTV loan fell from 0.77 (including origination fee) to 0.68.
- for 5/1 Adjustable Rate Mortgage (ARM), the average interest rate was 6.33%, down from 6.37% the previous week. Points for an 80% LTV loan dropped from 0.71 (including origination fee) to 0.58, and the effective interest rate also dropped.
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