Residential homes in Discovery Bay, California, United States, on Thursday, November 7, 2024. US mortgage rates rose to the highest level since July.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates continued to rise last week as investors considered the future of the economy under a Trump presidency. The mortgage market has basically taken a break.
Total application volume was essentially flat, rising just 0.5% last week, compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Although this increase is small, it represents the first rise in overall demand in seven weeks.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less rose to 6.86% from 6.81%, with points falling to 0.60 from 0.68, including origination fees, for loans with a down payment of 20%. .
“Mortgage rates continued to rise last week, driven by higher Treasury yields as financial markets digested the potential impacts of a Trump presidency,” said Joel Kahn, deputy chief economist at the Mortgage Bankers Association. “The Fed’s 25 basis point rate cut was already expected and did little to move markets.”
Home loan refinancing applications, which are most sensitive to weekly movements in interest rates, fell 2% during the week to their lowest level since May. However, it was 43% higher than the same week one year ago. At this time last year, mortgage rates were 75 basis points higher.
Home mortgage applications rose 2% during the week and were 1% higher than the same week a year ago. Home buyers may be looking at prices lower than last year, but they are also seeing home prices rise. Meanwhile, the supply of homes for sale remains weak.
Applications for loans backed by the Federal Housing Administration and the U.S. Department of Veterans Affairs helped boost purchasing activity, up 3% and 9%, respectively, Kahn noted.
“FHA mortgage interest rates bucked the trend and were lower during the week, which likely helped some borrowers,” Kahn said. “Traditional purchase orders also rose slightly.”
Mortgage rates rose this Tuesday. The bond market was closed on Monday for the Veterans Day holiday.
“The market continues to work through election-related volatility,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote. “This involves a complex set of considerations. Some relate to actual expectations of changes in fiscal policy in the coming years. Some considerations are as simple as traders going through the process of exiting (and resetting) trading positions before the election.”
