For the first time in seven months, the rate for a 15-year fixed mortgage increased. The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances of $510,400 or less also increased from 2.88% to 2.92%, according to CNBC. These advances are affecting mortgage applications volume, which dropped 1.9% last week. Although mortgage rates are on the rise, applications to refinance a home loan remain 87% higher than one year ago. Only a week ago, refinancing applications were higher than 100%.
“Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “After a post-holiday surge of refinances, higher rates chipped away at refinance demand.”
Demand from homebuyers, however, increased despite the higher rates. Mortgage applications to purchase a home rose 3% for the week and were 15% higher than a year ago. The coronavirus pandemic spurred strong demand for larger, suburban homes. Despite the vaccine rollout, that demand does not appear to be abating. The biggest hurdles for homebuyers right now are high prices and record-low inventory of homes for sale.