The housing industry boomed after shelter-in-place orders were lifted due to factors such as pent-up demand, but the drop in mortgage applications may point to a coming slowdown. CNBC reports that mortgage applications to purchase a home decreased for the second week in a row. Last week's 1% decrease may show that limited supply is affecting homebuyer options and their pent-up demand could be beginning to fade. Purchase volume was still 15% higher than last year, but even that comparison is shrinking. In addition, changes are occurring in refinance demand and average contract interest rates for 30-year fixed-rate mortgages.
“The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers’ options,” said Joel Kan, an MBA economist. “The average purchase application loan size increased to a record high in our survey — more proof that tight inventory conditions are leading to faster price growth.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $484,350 decreased to 3.29% from 3.30% last week. Points including the origination fee increased to 0.36 from 0.32 for loans with a 20% down payment. That is another record low.
Advertisement
Related Stories
Financing
Mortgage Rates Set to Remain Higher for Longer
After the Fed's announcement on Wednesday that it is holding interest rates steady, homebuyers hoping for lower mortgage rates will have to keep waiting
Financing
As Mortgage Rates Dip, Homeowners With High Rates Move to Refinance
A decrease in rates last week prompted a rise in refinancing by homeowners who obtained their mortgages at near-peak rates
Market Data + Trends
January's Mortgage Rate Dip Prompts Some Thawing of the Housing Market
A drop in mortgage rates from recent peaks nudged more homebuyers and sellers into the market, signaling the start of greater supply and demand