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Drop in mortgage rates not enough to spur homebuyers

Spencer Platt / Staff/ Getty Images.

Fears that the delta variant will prolong the pandemic sent mortgage rates drifting lower during the last week in July, but not by enough to stir much additional interest from homebuyers.

For the week ending July 30, purchase loan applications were down 2 percent from the previous week and 18 percent from a year ago, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. Requests to refinance were down 2 percent from the previous week and 3 percent from a year ago.

Mike Frantantoni

“Interest rates drifted lower globally last week, as markets assessed the latest concerns regarding the delta variant,” the MBA’s Mike Fratantoni said in a statement. “Thirty-year mortgage rates dropped below 3 percent in our survey for the first time since this February, presenting an opportunity for many homeowners who have not yet refinanced to lower their rate and their payments.”

Requests to refinance accounted for more than two-thirds (67.6 percent) of all mortgage applications, the MBA said. Fratantoni said the drop in purchase loan applications reflects “the ongoing lack of inventory that continues to drive rapid home-price appreciation across the country.”

The latest numbers from CoreLogic show annual home price appreciation hit 17.2 percent in June, a pace not seen since 1979.

Although rates eased for the most popular type of mortgage among homebuyers — the 30-year fixed-rate conforming loan — rates for jumbo mortgages, FHA loans and adjustable-rate mortgages were up slightly.

The MBA reported average rates for the following types of loans during the week ending July 30:

After their latest meeting, Federal Reserve policymakers said the path of the economy still depends on the course of the pandemic. So for the time being, the Fed will continue its $120 billion in monthly purchases of mortgage-backed securities and government debt, which are credited with helping keep mortgage rates near record lows.

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