Higher home prices mean higher mortgages and buyers today are now applying for $411,400 mortgages on average, the highest since February. But a drop in mortgage applications last week compared to the prior week may point toward a pullback from buyers. Mortgage application volume was 2% higher at this time last year, reports CNBC. A Mortgage Bankers Association economist says both governmental and conventional loan purchase applications decreased, likely due to supply shortages holding back purchasing activity and building material costs restraining new-home construction. As a result, home prices are continuing to rise at the fastest pace in more than a decade.
Buyers who are able to stay in the market also faced higher mortgage rates last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.15% from 3.11%, with points increasing to 0.36 from 0.32 (including the origination fee) for loans with a 20% down payment.
While slightly higher, the rate was still lower than it was in March, and that gave borrowers looking to save on monthly payments an opportunity. Applications to refinance a home loan increased 4% from the previous week but were 2% lower than the same week one year ago. The refinance share of mortgage activity increased to 63.3% of total applications from 61.3% the previous week.
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