Refinancings, mortgage rates down as agencies postpone new fee

New purchases remained relatively unchanged

National /
Sep.September 02, 2020 09:45 AM
(iStock)

(iStock)

Refinancing activity and mortgage rates were down last week, while new purchases held relatively steady — but both figures are still much higher than a year ago.

The index tracking volume of mortgage applications to buy homes each week, known as the purchase index, decreased a seasonally adjusted 0.2 percent from the previous week.

The metric, from the Mortgage Bankers Association, was 28 percent higher than it was the same time last year, marking the 15th straight week of year-over-year gains.

“Mortgage rates have remained below 3.5 percent for five months now, and it’s possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.

Last week, the Federal Reserve signaled that it will maintain low rates for the long haul, keeping the cost of borrowing low for potential homeowners. But that can drive up prices, too, as more buyers enter the housing market.

The continued growth in purchase applications reflects an increase in demand for homes as workers shift to home offices and grapple with whether to send their children back to school or keep them home. The new dynamic has led some to question the preference of living in dense urban areas.

The shift caused a surge in the median home price in July, which reached a record $300,000. Homebuilding also surged, sending lumber prices higher, too.

An MBA index that tracks refinance applications fell an adjusted 3 percent last week, but still remains 40 percent higher than it was last year.

The decrease comes after Freddie Mac and Fannie Mae, government-sponsored entities that securitize mortgages, announced new fees for refinancings. The move was met with dismay from the mortgage industry, and accusations that the agencies are trying to benefit from consumer activity rather than support affordability. The new fee, slated to begin in September, was instead delayed until Dec. 1.

The average 30-year, fixed-rate mortgage fell to 3.08 percent from 3.11 percent for conforming loans, or loans less than $510,400. Jumbo rates remained unchanged at 3.41 percent.

Overall, mortgage activity fell by a seasonally adjusted 2 percent from the week prior. Refinancing applications make up 62.5 percent of the surveyed loans.

MBA’s weekly survey of mortgage loans, which has been conducted since 1990, covers 75 percent of the U.S. residential mortgage market.


Related Articles

arrow_forward_ios
Two penthouse apartments were sold at 150 East 78th Street with the intent of combining them (Compass)
Double penthouse asking $33M is priciest listing snapped up
Double penthouse asking $33M is priciest listing snapped up
Ford estate fetches $105M, a Hamptons “record” but far below ask
Ford estate fetches $105M, a Hamptons “record” but far below ask
Ford estate fetches $105M, a Hamptons “record” but far below ask
HRI founder Aaron Carr and Virginia Attorney General Mark Herring (Facebook, Getty)
Housing Rights probe pins voucher discrimination on VA landlords, brokers
Housing Rights probe pins voucher discrimination on VA landlords, brokers
School and office reopenings led to fewer reservations at the end of summer. (iStock)
Hamptons rental market had strong summer, begins to cool
Hamptons rental market had strong summer, begins to cool
Zillow CEO Rich Barton (Getty, iStock)
Zillow hits the brakes on iBuying
Zillow hits the brakes on iBuying
More than 27,000 Long Island households behind on rent
More than 27,000 Long Island households behind on rent
More than 27,000 Long Island households behind on rent
91 Sergio Franchi Drive and Sergio Franchi (Sotheby's, Getty)
Sergio Franchi’s 200-acre Connecticut estate lists for $12.6M
Sergio Franchi’s 200-acre Connecticut estate lists for $12.6M
Automatic for the people: SmartRent CEO on why landlords are going all-in on connected homes
Automatic for the people: SmartRent CEO on why landlords are going all-in on connected homes
Automatic for the people: SmartRent CEO on why landlords are going all-in on connected homes
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...