Foreign buyers come with a realtor to buy a home in Dunlap, Illinois.
Daniel Acker | Bloomberg | Getty Images
Two straight weeks of new record-low mortgage rates brought consumers back to their lenders, but rates may now be off course.
Mortgage application liabilities increased significantly 6.8% last week compared to the previous week, according to the seasonally adjusted index of the Mortgage Bankers Association. This after they pulled something the week before.
The average contract interest rate for 30 year fixed rate mortgages with matching loan balances ($ 510,400 or less) dropped to 3.06% from 3.14%, with points decreasing to 0.33 from 0.39 (including start-up costs) for loans with a 20% down payment.
“Mortgage rates fell across the board last week as investors grew less optimistic about the economic rebound, seeing the resurgence of virus cases. Loan types such as the 30-year fixed, 15-year fixed, and jumbo all reached research slows,” said Joel Can, an MBA economist.
Mortgage applications to refinance a home loan, which are the most rate-sensitive, jumped 9% for the week and were 47% higher than the same week a year ago. The annual comparison, although still strong, has shrunk dramatically over the past few weeks.
The share of mortgage refinancing activity increased to 65.7% of total applications from 63.9% the previous week. That is the highest share since April.
Mortgage applications to buy a home rose 2% for the week and were a strong 22% higher than the same week a year ago.
“While this was still positive news for the purchasing market, the slow slowdown in labor market improvement and tight housing inventory remain a concern for the coming months, even as low mortgage rates continue to provide support,” Kan added.
That support of low rates can also increase. Mortgage rates rose sharply on Tuesday amid a sell-off in the bond market. Mortgage rates follow closely on the proceeds of the 10-year U.S. Treasury.
“Rates went up as fast as they have since rising in early June, eventually hitting the highest levels in more than two weeks,” Matthew Graham, chief executive officer at Mortgage News Daily, wrote in an article Tuesday night. “Days like today should serve to increase our level of caution when it comes to assuming that rates will continue to move lower. It should also argue for an increased level of preparation. so that we can ensure that we can take advantage of opportunities to capitalize on all possible recovery rates.
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