A lot of buyers have been flocking the market in this busy spring home buying season because of the low mortgage rates. While a lot of people are taking advantage of the rates nearing its lowest in three years, a recent report shows that there was a drop in the number of mortgage applications because of a slight increase in the interest rates.
Mortgage applications fell 2 percent from the previous week, as mortgage rates for 30-year fixed rate mortgages increased slightly from 3.83 to 3.85 percent, reports CNBC. The increase was said to be due to a number of different factors.
"Rising oil prices and an improved outlook for global economic growth combined with declining U.S. jobless claims to push U.S. Treasury higher during the latter half of last week," said MBA's vice president of research and economics, Lynn Fisher.
The total volume of mortgage applications decreased 4.1 percent last week as rates continued to rise for two consecutive weeks. Points also increased from 0.32 to 0.35 for 80 percent loan-to-value ratio loans.
Refinance applications also saw a five percent drop from the previous week, as this type was more sensitive to changes in the rate. Despite this drop in mortgage applications, however, the publication notes that the applications for this week were still 14 percent higher than the same week from last year.
These figures also reflect the highest number of applications since 2010. The publication also notes that the rise in mortgage rates alone may not be the sole reason for the drop in mortgage applications.
As previously reported here on Realty Today, buyers are becoming increasingly frustrated with the lack of homes for sale in the market. First-time home buyers are having a more difficult time because they are competing against investors who have better credit scores and more cash available to pay for the down payment.
