Mortgage Applications Stall as Rates Increase
Jul 3rd, 2019 @ 10:23 PM by Amber Nelson
Long-term U.S. mortgage interest rates rose in the latest week, according to data from Freddie Mac, without having much effect on home loan application volume.
The average rate on a 30-year fixed-rate mortgage rose to 3.75% with 0.6 point, up from 3.73% the week before. One year ago, the average rate was much higher at 4.52%.
The 15-year fixed-rate mortgage carried an average rate of 3.18% with 0.5 point, an increase from 3.16% a week earlier but still well below the 3.99% from last year.
Mortgage rates headed upward in response to financial markets optimistic about the U.S. and China agreeing to resume trade negotiations. However, investors got nervous again on Monday when the U.S. announced possible tariffs on European goods. Those fears are likely to push mortgage rates back down in the coming week.
“We’re seeing a tug of war happen as the fixed income market flashes warning signs while the equities market continues to march higher with optimism,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The data suggests the economy is weakening but is still on very solid ground with high consumer confidence and strong labor market. Closer to home, the housing market continues to slowly improve and gain momentum as we head into the second half of the year, which is good news and should keep the economy growing.”
Meanwhile, the number of mortgage applications was virtually unchanged this week, the Mortgage Banker Association’s market composite index slipping 0.1%. Refinance applications fell 1% while home purchase loan requests rose 1%. Refinance applications made up 51% of all mortgage activity for the week.
The MBA sees mortgage volume making a slow but steady climb. “In continuation of the gradual growth trend seen throughout the first half of 2019, purchase activity was almost 10 percent higher than a year ago, “said MBA economist Joel Kan.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.