Mortgage rates dropped once again last week, but it caused more homeowners to apply for refinancing rather than new homebuyers jumping into the market. The current average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of up to $510,400 dropped to 3.01%. The refinance application volume advanced by 8% during that week, making the volume 50% higher than last year. On the flip side, applications to purchase a mortgage dropped 2% for the week. The mortgage application volume has been dropping little by little for some time now, but remains 21% higher than last year.
“There are signs that demand is waning at the entry-level portion of the market because of supply and affordability hurdles, as well as the adverse economic impact the pandemic is having on hourly workers and low- and moderate-income households,” said Joel Kan, an MBA economist. “As a result, the lower price tiers are seeing slower growth, which is contributing to the rising trend in average loan balances.”
The average loan size increased again, to a record $371,500, thanks to stronger activity on the high end of the market.
Mortgage rates climbed slightly to start this week but are likely to head lower on the news that President Donald Trump said he is halting stimulus negotiations until after the election.