Mortgage rates moved just a tiny bit higher, but apparently it was enough to dampen interest in refinances.
That caused overall mortgage application volume to fall 5.3% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.99% from 3.98%, with points remaining unchanged at 0.33 (including the origination fee) for loans with a 20% down payment.
“The 10-Year Treasury yield increased last week amid signs of stronger homebuilding activity and solid consumer spending, leading to a rise in conventional conforming and jumbo 30-year mortgage rates to just under 4 percent,” said Mike Fratantoni, MBA’s chief economist.
As a result, applications to refinance a home loan fell 5% from the previous week but were still 128% higher than a year ago, when rates were 87 basis points higher. The refinance share of mortgage activity increased to 62.6 % of total applications from 62.2% the previous week.
Mortgage applications to purchase a home fell 5% for the week but were 5% higher compared with the same week one year ago. Interest rates are not the primary reason home sales are slowing. There is a severe shortage of existing homes for sale, and that has sidelined would-be buyers, especially at the lower end of the market.
“We are in the slowest time of the year for the purchase market,” Fratantoni said. “The increase in construction activity will bolster housing inventories, which should be a positive for purchase volumes going into 2020.”