Interest rates have finally settled somewhat in the past week after a period of uncertainty, but the mortgage market itself continued to see declines. The total number of applications for new mortgages dropped 3.3 percent from last week, the Mortgage Bankers Association (MBA) reports. Homeowners seeking to refinance also declined, dropping five percent. While rates have steadied, they have done so at a higher rate that has borrowers backing off. When rates were lower one year ago, the total volume of refinance was 4.5 percent higher.
For fixed thirty-year mortgages done on an 80 percent loan-to-home value ratio with a balance less than $417,000, the average interest rate has dropped only a small fraction, falling from 3.94 percent to 3.93 percent. Points, including the loan’s origination fee, decreased from 0.42 to 0.35.
MBA vice president of research and economics, Lynn Fisher, said that the cause of this decline is that the total number of borrowers who would benefit from these lower rates has declined.
Loans for the purchase of a new home dropped one percent this week. Normally the warmer spring temperatures lead to a boost in the housing market, but with fewer homes for sale than normal, buyers may not be able to find properties in their budget. Overall, though, mortgage applications made to buy properties were up by 25 percent from the same week in 2015.
Zillow Group Chief Economist, Stan Humphries, notes that this is a seller’s market and expects that to continue through much of 2016.