House in Discovery Bay, California, United States, Thursday, November 7, 2024.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
Mortgage rates continued to climb last week as investors consider the future of the economy trump card Presidency. The mortgage market has largely taken a breather.
Total applications were essentially flat last week, up just 0.5% from the previous week, according to the Mortgage Bankers Association’s Seasonally Adjusted Index. While the increase was small, it marked the first rise in overall demand in seven weeks.
The average contract interest rate for a 30-year fixed-rate mortgage with a conforming loan balance of $766,550 or less increased from 6.81% to 6.86%, and points dropped from 0.68 to 0.60 for a loan with 20% down, including the origination fee.
“Mortgage rates continued to rise last week as U.S. Treasury yields rose as financial markets priced in the potential impact of a Trump presidency,” said Joel Kan, deputy chief economist at the Mortgage Bankers Association. “Mortgage rates continued to rise last week.” A 25 basis point interest rate cut is expected, but it will have little impact on the market.”
Home loan refinancing applications, which are most sensitive to weekly interest rate changes, fell 2% this week to the lowest level since May. However, the figure was 43% higher than the same week a year ago. Last year, mortgage rates were 75 basis points higher.
Mortgage applications for home purchases increased 2% this week and were 1% higher than the same week a year ago. Homebuyers may be seeing lower interest rates than last year, but they’re also seeing higher home prices. Meanwhile, the supply of homes for sale remains scarce.
Kan noted that loan applications backed by the Federal Housing Administration and the U.S. Department of Veterans Affairs helped drive stronger buying activity, rising 3% and 9%, respectively.
“FHA mortgage rates, bucking the overall trend, moved lower this week, which may have helped some borrowers,” Kan said. “Conventional purchase applications also rose slightly.”
Mortgage rates were higher on Tuesday; bond markets were closed Monday for the Veterans Day holiday.
“The market continues to experience election-related volatility,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote. “This involves a complex set of considerations. Some of which are related to changes in fiscal policy in the coming years. Actual expectations are related. Some considerations are as simple as the process of traders exiting (and resetting) their pre-election positions.”
