Mortgage rates dropped to the lowest averages since November, but that did little to entice home buyers and refinancers last week.
The Mortgage Bankers Association reports that total mortgage application volume—including for refinancing and home purchases—eked out just a 0.1 percent week-over-week increase. Volume is nearly 22 percent lower than a year ago.
The drop in loan demand is coming at a time when mortgage rates are falling, which usually serves as an enticement to homeowners to refinance. But refinance applications increased just 2 percent for the week. Applications remain 40 percent down from the same week a year ago, the MBA reports.
Applications for home purchases dropped 2 percent for the week, but applications remain nearly 10 percent higher than a year ago.
“Last week, mortgage rates dropped to their lowest level since the week of the November 2016 election as investors sought safety given the tense geopolitical environment, especially the concerns with respect to North Korea,” says Mike Fratantoni, the MBA’s chief economist.
The 30-year fixed-rate mortgage dropped to a 4.12 percent average last week, down from 4.14 percent the week prior, the MBA reported.
Some home buyers are looking to offset rising home prices by taking out an adjustable-rate mortgage, which tend to come with a lower initial interest rate. ARM volume has grown 13 percent higher than a year ago. Also, FHA loan applications, known for their low down payment offerings, are up 4 percent from a year ago.
Source: “Mortgage Rates Drop to Lowest Since Election, But Borrowers Barely Budge,” CNBC (Aug. 16, 2017)
