As the weeks go by, the rates get lower.
A few weeks ago mortgage interest rates dipped below the 3% barrier–which was a line in the sand many industry experts doubted would ever be crossed. Now, according to Freddie Mac’s latest weekly report, mortgage interest rates reached 2.88%–a new lowest on record, the eighth time this year. In the weeks between 2.98% and where we are now there was a one week blip where they landed just over 3% but quickly dipped back down again to 2.99% the week after, before dropping all the way to 2.88% this week.
This is the new low for 30-year fixed rates mortgages, but for 15-year fixed loans the rates were as low as 2.44%. As Sam Khater, Freddie Mac’s Chief Economist, said in the release, “We expect rates to stay low and continue to propel the purchase market forward. However, the main barrier to rising demand remains the lack of inventory, especially for entry-level homes.”
Despite this decrease in rates, there was a slight downturn in the number of applications for both purchases and refinances compared to the week before. Purchase applications were 5% lower and refinance applications were 7% lower compared to one week ago, according to the report from the Mortgage Bankers Association. However demand is still noticeably on the increase compared to the same week on the calendar a year ago. Refinances were 84% higher compared to last year and purchase applications were 22% higher.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, added in the statement that this means 11 straight weeks of purchase applications increasing year-over-year.
August is typically a slow month for home buying activity so a 5% decrease is not yet a sign of things slowing down within the market. If it continues to decrease into September then we may have a change in demand on our hands.