Mortgage rates rose last week for the fourth time in five weeks, causing another pullback in refinancing. Total mortgage application volume was essentially flat, falling 0.1% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.73% from 6.52%, with points rising to 0.69 from 0.64 (including the origination fee) for loans with a 20% down payment. That is the highest level since July of this year.
Applications to refinance a home loan dropped 6% for the week but were 84% higher than the same week one year ago, when the 30-year fixed was 113 basis points higher.
“After a brief burst of activity in September when rates were almost 60 basis points lower, overall applications have declined 27 percent, driven by a pullback in refinances. Government refinances accounted for a large part of the decrease, dropping 12 percent over last week,” wrote Joel Kan, an MBA economist, in a release.
Applications for a mortgage to purchase a home increased 5% for the week and were 10% higher than the same week one year ago. Real estate brokerages have reported a surge in interest from homebuyers recently, as the supply of homes for sale has increased. Some potential buyers may be looking to lock in rates before any market volatility around Election Day.
Mortgage rates moved higher to start this week. The average rate on the 30-year fixed rose over 7% on Tuesday, according to a separate survey from Mortgage News Daily.
“Expect volatility potential to remain elevated through the 2nd half of next week at the very least with each day between now and then at risk of fairly substantial movement,” wrote Matthew Graham, chief operating officer at MND. “The riskiest days are this Friday, next Wednesday, and next Thursday due to the jobs report, election, and Fed announcement.”