Mortgage applications edged slightly higher last week, as rates fell to their lowest level since November.
Applications rose 3.6 percent on week. However, the move was entirely due to a 7 percent gain in refinances, according to the Mortgage Bankers Association. Meanwhile, applications to purchase a home fell less than one percent on week but dropped 12 percent on year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.39 percent from 4.43 percent. Concerns over whether or not the European Central Bank (ECB) might undertake easing measures at its June policy meeting spooked equity markets last week. Lackluster retail sales this week didn’t help matters. As investors flee to the relative security of the bond market, yields fall, and interest rates loosely follow those moves.
“We always get some response to any move to periodic highs/lows in rates. Some magic percentage of mortgage holders are always needing or wanting to refinance, and some percentage of that percentage is flexible as to their lock time frame,” said Matthew Graham COO of Mortgage News Daily. “Those are the folks that make the applications numbers move the most. In general, they’re locking more as rates are hitting periodic lows.”