Refinances rise as new purchases fall in rate-squeezed market
The summer housing market is off to a sluggish start, with potential homebuyers caught between limited housing inventory and higher interest rates.
New data from Mortgage Capital Trading (MCT) revealed a 7.84% month-over-month drop in mortgage lock volume for June. The decline followed a brief uptick in volume at the beginning of the buying season, suggesting an ongoing stalemate between limited housing supply and higher interest rates.
The report also showed purchase lock volume decreased by nearly 9%, while rate/term refinance volume increased by 11.56%. Cash-out refinance volume saw a slight decrease of 0.36%.
Year-over-year figures painted a different picture, with total mortgage lock volume up 6.11%. Purchase locks increased by 5.01%, and rate/term refinance volume surged by 92.17% compared to last year. However, cash-out refinance lock volume dropped 3.9% annually.
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Andrew Rhodes, senior director and head of trading at MCT, commented on the potential impact of upcoming economic reports: “If the upcoming nonfarm payroll report and consumer price index (CPI) continue to align with predictions, and these economic indicators continue to show progress, we could see one or two rate cuts by the end of the year.”
Lower interest rates would not only make mortgages more affordable for buyers but could also encourage more homeowners to list their properties, addressing the supply shortage that’s been a persistent thorn in the market’s side.
“The limited supply of available homes, coupled with mortgage rates hovering around 7%, has contributed to the observed decline in activity for June,” MCT wrote in its report. “As the market navigates these constraints, the mortgage industry anticipates a sideways trend over the next couple of months. Market supply likely peaked at the start of summer, and with rates remaining steady, significant changes in volume are not expected in the near term.”
The MCT lock volume indices provide a comprehensive view of rate lock volume activity within the residential mortgage industry. These indices are categorized by lock type, including purchase, rate/term refinance, and cash-out refinance, and reflect a wide range of lender sizes, products, services, and business models from MCT’s national footprint.
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