Potential homebuyers arrive with a real estate agent for a house for sale in Dunlap, Illinois.
Daniel Acker | Bloomberg | Getty Images
Two straight weeks with new record low mortgage rates took consumers back to their lenders, but interest rates can now turn the course.
The loan application volume increased significantly by 6.8% last week compared to the previous week, according to the Mortgage Bankers Association̵
The average contractual interest rate on 30-year fixed-rate fixed loans with corresponding loan amounts ($ 510,400 or less) decreased to 3.06% from 3.14%, with points falling to 0.33 from 0.39 (including the original fee) for loans with 20% lower payment.
“Mortgage rates fell across the board last week as investors became less optimistic about the economic recovery given the re-emergence of virus cases. Loan types such as the 30-year fixed, 15-year fixed and jumbo reached all research levels,” said Joel Kan, MBA- economist.
Loan applications to refinance a home loan, which is most interest rate sensitive, jumped 9% for the week and was 47% higher than the same week a year ago. The annual comparison, while still strong, has shrunk dramatically in recent weeks.
The refinancing share of the mortgage activity increased to 65.7% of the total applications from 63.9% the previous week. This is the highest percentage since April.
Mortgage applications to buy a house increased by 2% for the week and were a strong 22% higher than the same week a year ago.
“While this was still positive news for the buying market, the gradual decline in the improvement in the labor market and the tight housing inventory continue to be a problem for the coming months, although low mortgage rates continue to provide support,” added Kan.
That support from low prices can also decrease. Mortgage rates rose sharply on Tuesday in the middle of a sale on the bond market. Mortgage rates loosely follow the return on the ten-year US Treasury.
“Prices have risen as fast as they have risen since early June, finally hitting the highest levels in more than two weeks,” Matthew Graham, chief executive of Mortgage News Daily, wrote in an article Tuesday night. “Days that today should serve to increase our level of caution in assuming that prices will continue to fall. It should also argue for an increased level of preparation. so we can ensure that we can take advantage of the opportunities to take advantage of any recovery of potential interest rates.