Homeowners took advantage of a pullback in interest rates at the beginning of last week, hoping to refinance before the next rise.
That pushed total mortgage application volume higher by 3.1 percent for the week, according to the Mortgage Bankers Association’s seasonally adjusted report. Volume remains 8.5 percent below a one year ago, when rates were lower.
Refinance volume jumped 6 percent for the week, marking the highest level in a month. Although refinancing is still off 24 percent from a year ago because rates now are higher, that annual comparison might be about to change.
Interest rates jumped 37 basis points on the 30-year fixed in the week following the presidential election. They then continued even higher. By next week interest rates could be lower than the same week one year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less remained unchanged last week at 4.18 percent, with points increasing to 0.40 from 0.38, including the origination fee, for 80 percent loan-to-value ratio loans.
“Additional developments surrounding the administration’s tax-reform plan pushed rates lower at the beginning of the week, but this was effectively offset by news of stronger economic growth in Europe,” said Joel Kan, an MBA economist.
Mortgage applications to purchase a home, which are less rate-sensitive week to week, were basically unchanged, up just 0.4 percent. Purchase volume now stands 17 percent higher than the same week one year ago, a much larger annual spread than the past several months. That might be because contract signings to buy existing homes fell abruptly last November, likely stemming from political uncertainty at the beginning of the month and the spike in interest rates following the 2016 election.
Interest rates have been moving sideways this week, as the House and Senate continue working their respective tax overhauls toward a vote. The outcome of tax reform will likely move markets and interest rates. The first vote in the House is expected Thursday.