This Friday, September 21, 2012 photo shows a house for sale in Oklahoma City. Average US fixed mortgage interest rates have fallen once again to new lows. The drop suggests that the Federal Reserve’s stimulus efforts could have an impact on mortgage rates. Mortgage buyer Freddie Mac said Thursday, September 27, 2012 that the interest on the 30-year loan has fallen to 3.40 percent. That’s lower than last week’s rate of 3.49 percent, the lowest since long-term mortgages began in the 1950s. (AP Photo / Sue Ogrocki)
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Mortgage rates hit another record low last week – the 15th this year and the second record in as many weeks.
However, the decline did not cause a significant change in weekly mortgage applications, but demand is significantly stronger than a year ago.
The total number of mortgage applications increased by 1.1% from week to week according to the seasonally adjusted index of the Mortgage Bankers Association.
Average contract rate for 30-year fixed-rate mortgages and conforming loan balances ($ 510,400 or less) decreased from 2.90% to 2.85%, with points decreasing from 0.35 to 0.33 (including origination fee) for loans with a 20% payment decrease.
“US Treasury yields remained low last week, in part due to uncertainty about the outlook for additional pandemic-related government stimuli, as well as concerns about the continued rise in Covid-19 cases across the country,” said Joel Kan, MBA associate vice-president . chair of economic and industrial forecasting.
Refinancing requests for a home loan, most sensitive to swings in mortgage interest rates, were up 1% during the week, but were a strong 105% higher than the same week a year ago. Last year, mortgage rates were 113 basis points higher at that time. Refinancing now would bring significant savings to anyone who refinanced last year on their monthly payments.
Mortgage applications to buy a home were up 2% for the week and were up 26% year on year. December isn’t typically a strong month for home sales, but demand continues to rise as Americans continue to work from home. They want more space, and some now have the ability to work anywhere, giving them a lot more options to move.
“Requests to buy a home increased for the fourth time in five weeks as both conventional and government segments of the market posted gains,” Kan said. “Government purchase requests rose to their highest level since June for the sixth straight week – perhaps a sign of more new buyers entering the market.”
New buyers have faced strong competition for seriously low supply at the entry level of the market. Investors with a lot of money keep pouring in, and homebuilders are not building nearly enough cheap houses to meet the demand. House prices on the low side are rising the fastest, leaving some potential buyers on the sidelines.