• Alan Bermudez
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    Mortgage applications finally moved slightly higher last week, spurred by refinancers, as interest rates moved decisively lower.

    Total mortgage application volume increased 3.3 percent, from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted report. Volume remains 23 percent lower than the same week one year ago, when rates were even lower.

    After pulling back for the last few weeks, more homeowners applied for a refinance, sending volume 5 percent higher for the week. Refinance volume has been relatively stagnant, even as rates edged lower, but last week rates took a bigger step backward.

    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less decreased to 4.06 percent, its lowest level since November. That’s down from 4.11 percent. Points decreased to 0.38 from 0.43, including the origination fee, for 80 percent loan-to-value ratio loans.

    “Heightened geopolitical tensions last week brought mortgage rates to their lowest level since the 2016 election,” said Joel Kan, an MBA economist. “Refinance volume jumped as a result, and for the first time since January, the majority of application volume was for refinances, with the refinance share almost 51 percent.”

    Homebuyers are still less moved by rates and are more stuck in limbo due to a critically tight market with precious few homes for sale. Mortgage applications to purchase a home rose just 1 percent for the week and are about 5 percent higher than the same week one year ago.

    The effects of Hurricane Harvey also weighed on application volume, as banks shut down all mortgage activity for areas affected by the storm. They need to assess damage and reappraise some homes before either purchase or refinance applications can be approved.

    “Focusing in on Texas, unadjusted application volume was down 21.7 percent for purchase and 22.9 percent for refinances,” Kan said.

    Mortgage rates will likely fall even more this week, as global tensions are high and the U.S. is faced with yet another potentially catastrophic hurricane. Investors tend to move into the bond market as a relative safe haven, which pushes bond yields lower. Mortgage rates loosely follow the yield on the 10-year Treasury bond, which moved lower Tuesday, following the Labor Day holiday.

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      Alan Bermudez

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