Real estate news: Mortgage applications drop
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Real estate news: Mortgage applications drop
Mortgage applications fell 7.7% in the week ended Feb. 10 as mortgage rates rose after five weeks of declines, the Mortgage Bankers Association said, citing its Weekly Mortgage Applications Survey.
The average contract interest rate for conforming 30-year mortgages of $726,200 or less jumped to 6.39% from 6.18% the week before, while the rate for 30-year fixed-rate mortgages backed by the FHA climbed to 6.25% from 6.14%.
At the same time, MBA’s refinance index fell 13% from the week before, as the refinance share of mortgage activity decreased to 32% of mortgage applications from 33.9% in the preceding week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances of more than $726,200 increased to 6.26% from 5.96%, and the average contract interest rate for a 15-year fixed-rate mortgage increased to 5.85% from 5.64%.
“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time,” MBA Vice President and Deputy Chief Economist Joel Kan said in a news release. “Potential buyers remain quite sensitive to the current level of mortgage rates, which are more than two percentage points above last year’s levels and have significantly reduced buyers’ purchasing power.”
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CNBC’s Diana Olick joins ‘Squawk Box’ to report on the dropping mortgage demand due to inflation.
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Mortgage applications for new-home purchases fell 9% on a monthly basis and 5.9% on a year-over-year basis in May, the Mortgage Bankers Association reported, citing its Builder Application Survey.
“Mortgage applications to purchase a new home decreased in May for the second straight month, while the average Loan size, at $384,000, increased for the fourth consecutive month and reached a new survey high,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “Loan balances continue to rise because of a larger share of sales in the higher end of the market, as well as increased sales prices from strong demand and elevated building material costs.”
The seasonally adjusted annualized pace of sales dropped 3.8% in May on a monthly basis to 741,000 units. The rate of sales reached a survey high of 927,000 units in October 2020, the MBA said in a press release.
On an unadjusted basis, the association estimated that there were 68,000 new home sales in May, down 5.6% from 72,000 sales in April.
By product type, conventional loans composed 73.9% of loan applications in the month, while Federal Housing Administration loans comprised 14.8%, and Veterans Administration loans accounted for 10.4%. The average loan size for new homes rose to $384,323 in May from $377,434 in April.
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The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes loans for home purchases and refinancing’s, fell 14.4 percent to 713.6 in the week ended Nov. 12, the lowest since the July 9 week.
Borrowing costs on 30-year fixed-rate mortgages surged to a two-month high of 4.46 percent in the week, up from 4.28 percent in the previous period. The rate last month reached 4.21 percent, the lowest level in the survey, which has been conducted weekly since 1990.
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