Consumers saw an opportunity last week and took it – in a big way.
Mortgages fell to their lowest level in almost two years, so total mortgage loans increased by 26.8% in just one week, according to the Mortgage Bankers Association's seasonally adjusted index. The volume was 41% higher than a year ago.
The average contract interest rate for 30-year fixed-rate loans with matching loan balances ($ 484,350 or less) decreased to 4.12% from 4.23%, while the points remain unchanged at 0.33 including initial charge) for 20% repayment loans . That rate was 4.83% a year ago, 71
"The mortgage rate for all forms of loan fell by a significant margin for the second straight week, subdued by trade tensions with China and Mexico. The financial markets responded to more bearish communications from several Fed officials and weaker than expected employ in May." said Joel Kan, MBA's vice-president of economic and industrial forecasting.
Refinancing, which is most interest rate frequency, led to surpluses, jumped a remarkable 47% week to week and 97% annually. It pushed the refinancing share of the total loan application volume to 49.8% from 42.2%. It is nothing more than a refinancing boom, with applications now 63% over the four weeks, as prices have fallen 28 points during that time.
Mortgage applications to buy a home that had not received much tax on falling rates, finally jumped 10% per week and annually. Buyers usually do not respond immediately to weekly rates, but since prices have fallen for a few weeks now, it may have dampened more potential buyers outside the fence.
"Demand is still relatively strong, but there is likely to be some restraint from potential buyers, driven by some economic uncertainty. In addition, housing supply is still very close for the first time buyers," Kan says.
The supply is increasing in most major cities markets, but only in the moving and luxury range. Starterhem continues to be scarce, and builders still usually build more expensive homes. The housing starts have fallen overall, as builders saw very weak demand at the end of last year and now see only demand.
Will the prices be low or move even lower? Impossible to predict, but there are certain signals.
"We are in a consolidation phase now that the markets are in line with the long-term movement lower which began at the end of 2018," said Matthew Graham, Chief Operating Officer of Mortgage News Daily. "The next step will depend on how economic data evolves and if there are any more commercial bombshells."