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Fixed 30-year mortgage loans saw rates go up to 7 percent in July, which dampened overall demand but the lack of supply is still keeping home prices up in some parts of the country, a tell of a market that is “not normal,” according to a report by Black Knight Inc.
Black Knight Inc., a mortgage data provider, said that mortgage rate-lock volumes fell by 7 percent nationwide versus June. Mortgage rate-locks for purchase loans are a leading indicator of homebuying, and typically reflect a prospective buyer who aims to buy a home in the following 60 days.
The report stated that with only 3 percent of active mortgages carrying interest rates at or above current levels, there is little incentive for homeowners to refinance. At the national level, cash-out refinances were down by 5 percent month-on-month, while new rate or term refinance was up by 2 percent compared to June. Refinance share in fixed mortgage loans remained at 12 percent, while the 88 percent balance is purchase loans.
“While they moved around a bit in July, there was no escaping the fact that conforming 30-year rates topped 7 percent in July for the first time since they spiked last fall. On both a practical and psychological level, that put further downward pressure on mortgage demand,” Andy Walden, vice president of Enterprise Research Strategy, said.
“Rising rates may be tamping demand for homes at such record high prices, as evidenced by rate lock activity, but they’ve still yet to overcome an even greater deficit of supply. As a result, the purchase market is in a stalemate,” he added.
Greater Boston saw the steepest declines in lock volumes – sliding by 19.3 percent in July compared to June.
Year-on-year, Greater Boston saw the number of purchase rate locks slump by 20.3 percent, while the volume in dollar value also decreased by 14.8 percent. Rate-lock volumes in the area also dropped by 64.1 percent for cash-out refinances and 27.6 percent for refinances to a new rate or term.
Greater Boston landed at 10th place among the areas with the largest lock volumes, having a 2.1 percent share of the total.
The top 20 metro areas with the biggest mortgage lock volumes all saw decreases in lock volumes, except Tampa and Charlotte areas with slight increases of 0.5 percent and 0.8 percent, respectively.
