Mortgage rates started the week near a record low, but rose steadily throughout the week, peaking on Friday after the May job report, which was much less severe than expected. However, the week average showed only a small gain, with the 30-year fixed rate increasing to 3.38% compared to 3.37% for compliant loans with a 20% down payment. Points, including setup fees, remained unchanged at 0.30.
“The recovery in the purchasing market continues to accelerate, with the seasonally adjusted index reaching its highest level since January,” said Joel Kan, economist at MBA. “Shopping activity has increased for the eighth week in a row. ”
Repressed spring market demand and low interest rates are fueling a surprisingly rapid recovery in home purchases. As local economies open, so do open houses, but there is still a serious shortage of homes for sale. Inventories were down 25% last week from the previous year, according to Zillow.
Low rates to start the week likely fueled an 11% increase in mortgage loan refinancing requests. This volume was 80% higher than a year ago when mortgage rates were 74 basis points higher. As refinancing was up for the week, the annual comparison is getting smaller as fewer borrowers can benefit from it. Lenders are not offering the best refinancing rates due to the increased risk in the market for coronavirus mortgage-relief programs.
The refinancing share of the mortgage business rose to 61.3% of total applications, against 59.5% the previous week.
Mortgage rates fell again at the start of this week, but it remains unclear whether they have reached a ceiling or whether it was a temporary retirement. The Federal Reserve is not expected to raise interest rates at its meeting on Wednesday, but the meeting statement may provide a better overview of the direction of rates.
“The Fed’s announcement is the biggest potential flashpoint for volatility in the bond market this week. The Fed will certainly continue to buy treasury bills and mortgage-backed bonds, “said Matthew Graham, director of operations at Mortgage News Daily. “It’s a key ingredient keeping rates as low as they have been. ”