Soaring mortgage rates dampen loan application activity with one exception
The recent rising mortgage rates At a level not seen since last summer, app activity generally stagnated last week, except for a slight increase in the buying market.
The total number of claims edged up 0.5% from the previous week, according to the Mortgage Bankers Association. Applications withdrawn for refinancing rose only 0.1%, and seasonally adjusted buy applications jumped 2% in the week ending February 26.
The slight increase in buy apps may reflect a recent increase in yields on indicative 10-year Treasury bills. The 10-year started at around 0.9% in 2021 but rose, and last week peaked at around 1.5% before slumping. At the end of the day on Tuesday, the 10yr was just above 1.4%
“There has been a step forward in the past 10 years,” said Michael Franco, CEO of SitusAMC. “It could come back down, but given the additional stimulus that is expected to come out, infrastructure bills and concerns in the bond market about it, I think it might be a little stickier now.
Sometimes refinancing is actually improved when rates increase because it prompts some borrowers to act out of fear of further increases, but in the long run, an increase in rates usually leads to a decrease in activity. The market share of refi fell to 67.5% from 68.5% in the week ending February 19.
Homebuyers tend to increase as a share of the market when rates go up, and they’ve seen a seasonal rise last week as well.
“Purchase requests have increased, with an increase in government requests – real first-time buyers – reducing the average loan amount for the first time in six weeks,” said Joel Kan, associate vice president of the MBA in charge. economic and sector forecasts. A press release.
Overall, the share of loans in the government market increased as follows: Federal Housing Administration title loans increased from 11.2% to 12.1%, products guaranteed by the Department of Veterans Affairs increased by 11.9% to 12.3% and mortgages from the United States Department of Agriculture edged up. at 0.4% of 0.3%
The average overall loan amount was $ 336,200, up from $ 344,800 the week before. The average purchase loan amount was $ 412,300 and the average refinance loan amount was $ 299,600, up from $ 418,000 and $ 311,100 the week before, respectively.
The average government loan amount was $ 262,100, which almost matches the previous week’s $ 262,300.