Mortgage applications reversed course and posted an increase last week, as homeowners and home purchasers sought to take advantage of the lowest rates in six weeks. Mortgage application volume—for home purchases and refinance applications—rose 4.1 percent last week on a seasonally adjusted week-over-week basis, the Mortgage Bankers Association reported Wednesday. Volume, however, is still 2 percent lower than a year ago.
Broken out, applications to refinance rose 4 percent last week, but remain 17 percent lower than a year ago, when interest rates were much lower. Applications to purchase a home also rose 4 percent last week and are now 9 percent higher than a year ago.
The average 30-year fixed-rate mortgage fell to 4.75 percent last week, after averaging 4.84 percent the week prior. This marks the lowest rate since the week ending April 20, the Mortgage Bankers Association reports. Mortgage rates loosely follow the 10-year Treasury bond yield.
"Concerns over Italy's political turmoil and questions about the possible imposition of trade tariffs by the U.S. on its major trade partners pushed Treasury rates lower this week," says Joel Kan, an MBA economist. "While the level of refinance activity remains historically low, the reprieve in rate increases may have stopped the slide."
Mortgage rates did start to move higher again as this week began. More buyers are turning to adjustable-rate mortgages due to the overall rise in rates over the past year. The share of ARMs increased to 7.1 percent of total mortgage applications, the MBA reports.
"While rates are like any other financial instrument whose future can't be predicted, they do tend to pause and congregate at some levels more than others," Matthew Graham, chief operating officer at Mortgage News Daily, told CNBC. "We'll often see rising rates repeatedly run into a ceiling that goes on to become a floor in the future."
Source: “Weekly Mortgage Applications Rise 4.1% as Rates Hit Lowest Levels in 6 Weeks,” CNBC (June 6, 2018)