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Mortgage refinancing is declining as interest rates rise

Mortgage refinancing is declining as interest rates rise

An “open house” sign is displayed when potential home buyers arrive at a property for sale in Columbus, Ohio.

Tay Wright | Bloomberg | Getty Images

Record low mortgage rates now may be a headline of the past.

Now, several weeks of price hikes dampen incredibly high demand for refinancing. This resulted in the total volume of weekly mortgage applications falling 1.9% last week, according to the Bankers Association’s seasonally adjusted mortgage index.

The average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($ 510,400 or less) increased to 2.92% from 2.88%, with points increasing to 0.37 from 0.33 (including construction fee) for loans At 20% low pay. The rate was 95 basis points higher a year ago.

The average price on a 15-year constant rose for the first time in seven weeks, to 2.48%.

With potential savings savings rates now high, home loan refinancing applications decreased 5% during the week but were 87% higher than last year. That yearly comparison was over 100% just last week.

“Market expectations of a larger-than-expected financial relief package, which is expected to further boost economic growth and reduce unemployment, have pushed Treasury yields up in the past two weeks,” said Joel Kahn, associate vice president of economic and industry forecasts at the MBA. “After the wave of refinancing that followed the holiday, high rates of refinancing demand fell.”

However, the demand from homebuyers increased despite the higher rates. Mortgage applications to purchase a home increased 3% during the week and were 15% higher than last year. The coronavirus pandemic has spurred strong demand for larger, suburban homes. Despite the vaccine being introduced, this demand does not appear to be abating. The biggest hurdles facing homebuyers today are the high prices and record low inventory of homes for sale.

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“Homebuyers in early 2021 will continue to look for newer and bigger homes,” Kan said. The average size of purchase loans jumped to $ 384,000, the second highest in the survey, which dates back to 1990.

The incoming Biden administration prepares to present Multiple moves in the housing market It can work for both homebuyers and builders. However, foreclosure rates started the week flat, as traders will likely wait for the first announcement of major economic policy before taking any step.