After setting more than a dozen record lows last year, mortgage rates in the United States began 2021 on an upward climb, lighting a fire under borrowers, fearing they might miss the last of the lowest rates.
Mortgage applications to refinance a home loan spiked 20% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That was the highest level since last March. Volume was 93% higher than a year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.88% from 2.86% last week for loans with a 20% down payment. That rate was 99 basis points higher than a year ago.
Mortgage applications to purchase a home, less sensitive to weekly rate moves, rose 8% for the week and were 10% higher than a year ago. While demand for housing is still strong, the annual comparison was lower than it has been over the past six months, as buyers are faced with a record low supply of homes for sale and fast-rising prices. However, there was a promising sign in the numbers for first-time buyers.
Mortgage rates continued their upward trajectory this week, following rising bond yields. There is now also an expectation of more government relief as well as vaccines rolling out faster, which would improve the employment situation and the overall economy
