LIVE MARKETS-Mortgage rates dip but not below 7%; borrowers unimpressed

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MORTGAGE RATES DIP BUT NOT BELOW 7%; BORROWERS UNIMPRESSED

The cost of financing home loans edged lower last week but not enough to impress would-be borrowers, according to the Mortgage Bankers Association (MBA).

The average 30-year fixed contract rate USMG=ECI shaved off 7 basis points, but remained a smidgeon north of the psychologically important 7% level at 7.02%.

While applications for loans to purchase homes USMGPI=ECI squeaked out a 0.6% gain, those looking to refinance existing mortgages USMGR=ECI were unimpressed; refi demand USMGR=ECI softened by 2.9%.

Taken together, purchase and refi essentially canceled each other out; mortgage demand was essentially unchanged from the previous week, gaining 0.1%.

Elevated mortgage rates "likely continues to slow the pace of activity for both refinances and purchases," says Mike Fratantoni, chief economist at MBA. "Incoming economic data are likely to keep the Federal Reserve on hold for now, while uncertainties about economic policy are likely to keep longer-term rates, including mortgage rates, steady at these levels."

Mortgage rates are currently 24 bps warmer than the same week last year.

Over that same time period, purchase applications have dipped by 6.5% while refi demand is up 27.5%.

Economists took note of the executive order signed by President Trump on Monday calling for the U.S. government to increase the housing supply in order to bring down home prices.

(Stephen Culp)

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