Mortgage applications jumped for the second week in a row as refinancing requests surged due to a drop in interest rates. Applications for home purchases, however dropped to the lowest level in 2 months.
Applications increased 4.3% overall, but the drop in demand for purchases loans is not a good thing for the overall housing market. The drop in purchase applications was the result of rates jumping in late May which in turn caused many buyers to rethink their plans. Coupled with higher unemployment potential buyers are wary of jumping into the market for fear they could lose their jobs even though home affordability is near all time highs.
The spike in refinance applications is predictable because home owners looking to refinance can act quickly to take advantage of lower rates, while buyers tend to be less reactive to rate fluctuations.
Overall rates are well below what they were last year. 30 year fixed rates, excluding fees, average 5.05% versus 6.22% last year. Experts say mortgage rates need to be at 5% or below to significantly impact home loan demand.
Mike Owens is a Partner with Horizon Financial, Inc. He can be reached at 864 907 2678 or via e-mail at mowens@horizonfinancial.org
