Real estate agents leave a home for sale during a realtors open house in San Francisco, California.

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A brief drop in mortgage rates caused some borrowers to rush to their lenders to see if they could make savings. The total volume of mortgage applications rose 2.1% in the past week from the previous week, according to the Mortgage Bankers Association.

The average contract rate for 30 year fixed rate mortgages with compliant loan balances ($ 548,250 or less) decreased from 3.18% to 3.11%, with credit points decreasing 20% ​​from 0.34 (including the origination fee ) payment decreased to 0.32. This is the lowest rate since February and 32 basis points lower than a year ago.

As a result, home loan refinance applications, which have been weak recently, rose 3% from the previous week but were still 12% lower than a year ago, according to the seasonally adjusted index of the MBA. The refinancing share of mortgage activities remained largely unchanged.

“The decline in interest rates helped the refinancing index hit its eight-week high, driven by a 4 percent increase in conventional refinancing,” said Joel Kan, vice president of economic and industrial forecasting for MBA. “In addition, refinancing loan balances rose for the fourth straight week, indicating that higher bank borrowers quickly benefited from lower interest rates.”

Home buyer mortgage demand rose just 1% over the week and was 13% higher than a year ago. The annual comparison has been skewed for several weeks as the real estate market stalled at the start of the pandemic in March 2020 and then came back sharply by June. It will be more important to watch this comparison over the coming weeks to see how it adjusts.

“Most markets continue to see robust demand this spring, but activity will continue to be limited by insufficient inventory levels and home construction challenges related to ongoing shortages and price increases for building materials,” added Kan.

Mortgage rates are already rising again this week, especially on Tuesday, as the supply of bonds on offer, especially government bonds and corporate bonds, has risen sharply.

“While none of these bonds are the same as those that affect mortgage rates most directly, they are so correlated and interdependent that mortgage rates will ultimately feel the negative effects of increased supply,” said Matthew Graham, chief operating officer at Mortgage News Daily.