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Applications and Rates Fall as Prices Grow

As home prices rise, applications and rates have fallen, according the the Mortgage Bankers Association (MBA) and Freddie Mac.

The MBA’s Market Composite Index, a measure of mortgage loan application volume, decreased 1.8 percent for the week. The falling number of applications come alongside the fall in mortgage rates for the week. Freddie Mac reported a weekly decline in mortgage rates by four percent.

The 30-year fixed rate mortgage from 4.08 percent the previous week to 3.97 percent. Last year at this time, the average rate for a 30-year FRM was 3.59 percent.

The 15-year fixed-rate mortgage saw a similar decline, falling from 3.34 percent the previous week to 3.23 percent. This time last year, the rate for a 15-year FRM was 2.85 percent.

According the MBA data, The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) and the the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) both decreased to their lowest levels since November 2016.

“The 30-year mortgage rate fell 11 basis points this week to 3.97 percent, dropping below the psychologically-important 4 percent level for the first time since November,” said Freddie Mac Chief Economist Sean Becketti. “Weak economic data and growing international tensions are driving investors out of riskier sectors and into Treasury securities. This shift in investment sentiment has propelled rates lower.”

Though mortgage rates and applications are falling, home prices are rising. Freddie Mac’s House Price Index has shown a steady increase in prices over the last several months. The S&P CoreLogic Case Shiller Home Price Index has shown a similar trend. January’s Index reflected a 31-month high in home prices. During January, home prices were up 5.9 percent year-over-year and 5.7 percent month-over-month.

About Author: Seth Welborn

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