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Mortgage rates have been on a roller coaster ride lately, albeit a low one. However, a mixed interest rate picture last week was enough to curb the recently increased refinancing demand.
The average rate on 30-year fixed loans with balances and a 20% down payment rose slightly to 3.11% to 3.11% after two weeks of decline after two weeks of decline, according to the Mortgage Bankers Association. The 15-year fixed rate loan, used by about one in five refinancing borrowers, fell to 2.46%, its lowest level since January.
"10-year government bond yields fell sharply last week, in part because investors became increasingly concerned about the spread of variants of Covid and its impact on global economic growth," said Joel Kan, an MBA economist .
As a result, applications for refinancing a home loan fell last week by a seasonally adjusted 3% and were 18% below the previous year's figure. Refinancing demand has been lower on an annual basis for some time as interest rates hit more than a dozen record lows in the past year, leading to a sharp rise in refinancing demand.
Home purchase mortgage applications fell 6% last week and were 18% lower year-over-year. High property prices are sidelining some buyers, and while the number of new listings is finally rising, the supply of homes for sale is still historically low, especially in the cheaper categories.
Mortgage rates fell more sharply earlier this week after a big sell-off in the equity markets on Monday. Concerns about the Delta variant and news of positive tests from Olympic athletes and major league baseball players led investors to rush into the relative safety of the bond market.
Refinancing could get a boost in the future after mortgage giants Fannie Mae and Freddie Mac announced last Friday that they would be abolishing an adverse market fee charged to lenders on all refinancing. The fee was introduced at the beginning of the pandemic and passed on to borrowers, so removing it could now be a source of further savings.