After rising steadily for months, mortgage rates made a U-turn last week and borrowers jumped to take advantage. The crisis in Ukraine caused a run on the bond market. Mortgage rates followed the fall in yields.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 4% from 4%, with points remaining unchanged at 0.44 for loans with a 20% down payment, according to the Mortgage Bankers Association. The rate was lower a year ago.
Demand for refinances jumped 9% last week compared with the previous week, but application volume was still half of what it was a year ago, when rates were lower.
Mortgage rates dropped for the first time in 12 weeks, as the war in Ukraine spurred an investor flight to quality, which pushed U.S. Treasury yields lower.
The number of applications for a mortgage to purchase a home increased 9% from the previous week but were 7% lower than a year ago. Increased supply hitting the market for the spring season is likely to be the reason for the jump in demand. It didn't hurt that mortgage rates were slightly lower.
The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth.
Mortgage rates jumped more than 25 basis points in two days, according to Mortgage News Daily. Despite the crisis in Ukraine, investors are moving away from bonds, causing yields to rise.
Matthew Graham, chief operating officer at Mortgage News Daily, wrote that the Ukraine situation does indeed drive demand for bonds, but the associated inflation implications are pushing demand away.
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