Last month, total mortgage application volume fell by 1.4%, while refinance applications plummeted by 40%.
Freddie Mac reported that the benchmark for a 30-year fixed-rate mortgage had ratcheted up to 2.97% – still historically low. For context, last year at this time, Freddie Mac’s benchmark stood at 3.45%. The Fed is still keeping rates artificially low by buying up billions of dollars of mortgage-backed securities. However, with rate increases in 6 of the last 8 weeks, it is clear that we’ve shifted into a rising rate environment.
“I don’t foresee mortgage rates jumping to an alarming level, but we should prepare for a rise of at least a decimal point or two,” said Lawrence Yun, chief economist for the National Association of Realtors. So, fears of a massive month-over-month rate jump on par with what we saw in June 2013 may not be warranted.
With increasingly positive economic outlooks amid vaccine rollouts and expectations for higher budget deficits, the Fed’s focus may soon turn to curbing inflationary pressures.