With mortgage rates ticking up as investors anticipate the Federal Reserve raising benchmark rates in December, the cost of borrowing is increasing.
"All the drop is on refinancings," said David Berson, former chief economist of Fannie Mae and current chief economist at Nationwide Insurance, in an interview.
MBA's seasonally adjusted Refinance Index fell 16%. Refinancing accounted for 55.1% of total mortgage applications, the lowest mark since June 2016.
MBA chief economist Mike Fratanatoni projected that mortgage originations would fall in 2017 due to a sharp drop in refinancing. But he said new purchase mortgages would increase about 10% in 2017 "based on the strengthening economy, employment, and housing demand."
"The housing market will continue to do well so long as the job market remains strong, and we anticipate a further drop in the unemployment rate in 2017," Fratanatoni said in an email.
inRead invented by TeadsAverage interest rates for 30-year fixed-rate mortgages hit levels not seen since July 2015. Rates for mortgages with balances of $417,000 or less were 4.23%, while rates for mortgages with balances of more than $417,000 were 4.18%.
"With mortgage rates going up, affordability is down," Berson said. But "affordability is still at a fairly high level."
Even rates of 5% would still be historically low, he noted.
Mortgages issued to purchase new homes, rather than refinancing existing mortgages, are still humming along at an encouraging clip.
Some "fence sitters" are buying now to avoid higher rates later, Berson said.
What's more, the strong housing market and wage increases are encouraging many buyers to take the plunge. Even notoriously cautious Millennials are increasingly jumping into the market, Berson said.
"Even though mortgage rates go up doesn't mean people will buy fewer homes," he said.
For the complete article please visit
USA Today
ABOUT
Dynamic Wealth Research was founded on the principle the world is changing at an ever-increasing pace. The greatest profit opportunities an investor will ever find are from massive, sweeping changes. Dynamic Wealth Research analyzes and closely follows these changes, keeps its readers on the leading edge of them, and shows you how to be best positioned these anxious, interesting, and ultimately profitable times.
