Demand for Mortgage Refinancing Drops -20%

Key Highlights

• Refinance applications dropped -5% for week and -20% from one year ago
• As mortgage rates move up, current and potential homebuyers pull back on borrowing

Rising Mortgage Rates Pushing Down Refinancing

Last week, average interest rates increased to 3.36% from 3.33% the week before.  This 3.36% rate is a 10-month high.

Overall, mortgage application volume fell -5.1% from the previous week, according to the Mortgage Banker’s Association (MBA).

Because refinancing is most sensitive to interest rate moves in either direction, demand for mortgage refinancing dropped -5% from the week before. Compared with the same time frame one year ago, mortgage refinance applications came in -20% lower.

Joel Kan, an MBA economist, said, “Refinance applications declined for the fifth straight week…with volume over the past 10 weeks down by more than -30%.

Home Buying Demand Remains “Sizable”

Kan continued.  “The rapidly recovering economy and improving job market are generating sizable home buying demand, but activity in recent weeks is constrained by quicker home-price growth and extremely low inventory.”

Is Interest Rate Environment Becoming More Supportive of Buyers?

Mortgage interest rates softened this week  (April 7).  The breakdown, according to Credible Operations, Inc., interest rates looked like this:

• 30-year fixed: 3.000%
• 20-year fixed: 2.750%
• 15-year fixed: 2.250%
• 10-year fixed: 2.000

Matthew Graham, CEO of Mortgage Daily News,wrote, “The evidence for a supportive shift in the rate environment is beginning to mount.  The shift could be underwhelming or short-lived, true, but almost anything is better than the first quarter of 2021.  Simply drifting sideways at current levels would be a big win.”

Thanks to CNBC, Mortgage Bankers Association and Mortgage Daily News.

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