Mortgage Rates Taper Over the Prior Month, Boosting Refinancing

Facebooktwitterpinterestlinkedinmail

Over the last month, the Mortgage Bankers Association’s (MBA) tracked 30-year fixed-rate mortgage rate dipped below the elevated levels shown in April, mirroring a similar decline in Treasury yields. For the week ending May 14, the average 30-year fixed rate mortgage was 3.15%.

The MBA’s Market Composite Index, reflective of activity in refinancing and purchase mortgages, changed course compared to the prior four weeks. During the second half of April and the first half of May, there was a muted uptick in activity (following a prior decline), most of which was driven by refinancing. The MBA cites that the decline in rates helped the refinance index reach its highest level in eight weeks, driven by a 4% increase in conventional refinances.

While housing demand is strong, persistent supply shortages are constraining purchasing activity. Additionally, high building material costs make increasing the housing supply difficult. As a result, according to the MBA, the average loan balance for purchasing applications increased, reaching $411,400 in the latest week, the highest since February.

On an unadjusted basis, year-over-year gains in purchasing activity, albeit still positive, have dwindled over the last four weeks. Meanwhile, following a similar trajectory displayed by its seasonally-adjusted counterpart, the unadjusted refinancing index has reversed from negative year-over-year declines, while still maintaining a minimal year-over-year decline in the latest week. In the latest week, for example, refinancing was only 1.8% lower compared to this time last year, whereas four weeks ago it was 23.5% lower.

The refinance share of mortgage activity increased to 63.3% of total applications from 61.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.9% of total applications.



Tags: , , , , , , , ,

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: