Last week saw mortgage rates make a dramatic turnaround after rising for several months. Many borrowers took advantage of this change and have been climbing steadily ever since. Financial markets became nervous due to the Ukraine crisis. Bonds were more stable and this led to a panic in bond markets. Mortgage rates fell, and yields dropped.
According to the Mortgage Bankers Association, the average 30-year fixed rate mortgage interest rate with conforming loan balances of $647,200 and less fell to 4.09%, from 4.15%. Points remained unchanged at 0.44 (includes the origination fee), for loans with 20% down payments. This rate was lower than it was one year ago.
Accordingly, refinance demand increased by 9% over the week before, although application volume was only half that of the week last year, when rates were higher.
Joel Kan, an MBA economist, stated that mortgage rates fell for the first-time in twelve weeks. This was due to a flight of investors from quality caused by the conflict in Ukraine. U.S. Treasury yields were lower. As these two effects are against each other, there is a possibility of higher inflation due to disruptions in oil flows and other commodities. “Looking forward, rates will be volatile as they could rise.”
Although mortgage applications for home purchases increased by 9 percent over the past week, they were only 7% higher than the prior week. The weekly rate changes are not as important to homebuyers, so the increase in demand is likely to be due to more supply entering the market during spring. Considering the current high prices of homes, slightly lower mortgage rates weren’t a bad thing.
Kan said that the average loan amount remained at record levels, while higher-balance loan applicants continued to drive growth.
According to Mortgage News Daily, mortgage rates rose sharply in the beginning of this week. They jumped more than 25 basis point within two days. The ongoing withdrawal of investors from bonds is causing yields rise despite this. crisis in UkraineRates fell immediately as a result.
Matthew Graham, Chief Operating Officer at Mortgage News Daily, stated that while the Ukraine crisis does drive bond demand, inflation implications are also driving away demand. “The net effect was to move up to the highest mortgage rates ever since early 2019,” said Matthew Graham, chief operating officer at Mortgage News Daily.
