Weekly mortgage applications tumbled by 8.4% due to a brief surge in mortgage rates late last week, according to data from the Mortgage Bankers Association.
"The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.74% from 3.47%, with points increasing to 0.37 from 0.27 (including the origination fee) for loans with a 20% down payment," according to a CNBC report.
While refinance applications are still much higher than one year ago, they still took a slight hit from the spike in interest rates. Refinance applications dropped 10%, setting it at 74.5% of total applications, compared to 76.5% in the prior week.
"The ongoing situation around the coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February," said Joel Kan, an MBA economist, CNBC reported.
"The Federal Reserve’s rate cut and other monetary policy measures to help the economy should help to bring down mortgage rates in the coming weeks, spurring more refinancing."
Meanwhile, lenders are still trying to keep up with the surge of refinance applications from the initial drop in mortgage rates. However, a slow in new-home applications could bring some relief. "Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates," said Kan, according to the report.
To learn more about the drop in weekly mortgage applications, click here.