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Increase in mortgage rates leads to decrease in applications

On Behalf of | Sep 22, 2016 | Mortgages

Delaware residents who are interested in selling or buying homes might be interested in the recent decline in the number of mortgage applications. The decline came as interest rates for home loans increased.

According to CNBC, the volume of mortgage applications during the week of Sept. 12 to Sept. 16 fell by 7.3 percent from the volume of applications during the week prior to the rate increase. The volume of applications for refinancing existing mortgages fell by the largest numbers. People who are interested in refinancing their mortgages normally want lower interest rates carrying smaller payments than their existing loans.

The rate increase and corresponding decline in mortgage applications came after comments made by the Federal Reserve were interpreted as meaning that the agency may raise interest rates in the near future. The average rate for 30-year loans rose to 3.70 percent from 3.67 percent. The average points rose from 0.36 to 0.38 for loans with 20 percent down payments and 80 percent financing. The rate of refinancing was still higher by 26 percent than the volume from the same period a year ago. At that time, the rates were higher than they are currently.

While most buyers and sellers of residential real estate may not be too concerned about weekly fluctuations in the rates and applications for mortgages, they might want to consider when the best time to sell or purchase homes might be. If the Federal Reserve does raise interest rates, the cost of securing mortgages for home purchases will likewise increase. This might mean that fewer buyers will be entering the marketplace, making it more difficult for sellers to sell their homes. People may want to consult with a real estate attorney about the timing for purchasing or selling homes.