I was just reading Mortgage applications drop 6.6% on jumbo refi decline over at Housing Wire. There are some good insights into the national mortgage trends, which are a critical part of the housing market.
Refis are still the lion’s share of the mortgage market right now, holding 65% of mortgage activity. As the headline says, the jumbo loan market (>$417,000) is driving a decrease in mortgage applications. The larger the balance of the loan, the larger the dollar amount of any percentage rate fluctuation. Therefore, “borrowers with jumbo loans tend to be most sensitive to changes in rates. That sensitivity has been clearly apparent in the past few weeks with double and even triple digit percentage changes (emphasis mine) in refinance application volume for jumbo loans.” Jumbo loan holders are clearly feeling less motivated to refi right now.
The article expands out, slightly, looking at the rest of the market. Let’s follow along:
- Adjustable-rate mortgage (ARM) share decreased to 8.2% of total applications.
- I’d say that’s good on a macro level, as ARMs are a great vehicle to increase short-term affordability with lower rates about 1/2 that of a 30 year fixed. They are a pretty nice deal for the banks; they make money from interest. However, you want to be paying down principle, as that’s the main way to build equity.
- Let’s Look At Interest Rates
- FHA – 30-year fixed-rate mortgages increased to 3.84% from 3.81%
- 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.13% from 4.10%
- 15-year fixed-rate mortgages remained unchanged at 3.28%
- 5/1 ARMs remained unchanged at 2.94%
- And a breakdown of mortgage types:
- FHA increased from 8.3% last week to 8.9% this week.
- VA increased from 9.6% last week to 10.7% this week.
- USDA increased from 0.8% last week to 0.9% this week.
One key thing to keep in mind with all this: these are national numbers, and a look at the past. This stuff fluctuates daily, and regionally. But it does give some good insight into the overall picture.
Happy Wednesday, everyone!
