An “Open House” sign at Saratoga Homes Glendale Lakes community development in Arcola, Texas, on Tuesday, July 12, 2022.
Mark Felix | Bloomberg | beautiful pictures
After falling in late July, mortgage rates rose on average again last week, but the daily fluctuations are volatile. According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage demand has fragmented, with an increase in refinancing but a decline in applications from homebuyers.
The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) increased to 5.47% from 5.43%, with a point increase of 0. 80 from 0.65 (including principal) for loans with 20% down payment. While the weekly averages haven’t changed much, the daily performance has been more impressive.
Another reading from Mortgage News Daily showed the fixed 30-year average rate up 45 basis points early last week, then fell 41 basis points on Thursday and then rose back up to 36 basis points. Mortgage rates don’t often move with such large increases.
That volatility could be to blame for increased refinancing, which has been steadily declining since the start of the year. Those apps grew 4% for the week. Some may have been quick to take advantage of the rate drop or still hope to receive lower services from previous weeks. However, refinancing is still down 82% from a year ago, when interest rates were right around 3%.
Mortgage applications, which are less responsive to weekly interest rate swings, fell 1% for the week and 19% from a year ago.
Joel Kan, MBA’s vice president of economic and industrial forecasting, said: “The buying and selling market continues to shrink, despite a strong job market. “Activity has now fallen for five of the past six weeks, as buyers remain on the sidelines as affordability conditions remain challenging and doubts about the strength of the economy.”
Mortgage rates fell slightly earlier this week and were less volatile than they were last week. That could change on Wednesday with the release of the latest consumer price index, which measures inflation in the economy. The bond market tracks this perhaps the closest of all economic indicators.