“It was a mixed week for rates in MBA’s survey. Treasury yields finished the week slightly higher as a hawkish statement from the FOMC and market jitters caused by trade concerns and other geopolitical uncertainty offset each other,” said Joel Kan, an MBA economist.
Mortgage applications to purchase a home, which are less rate-sensitive, rose 4 percent from the previous week and were 3 percent higher than a year ago.
Homebuyers are still challenged by rising home prices and a severe shortage of homes for sale, especially on the lower end of the market. That may be why the adjustable-rate mortgage share of total activity rose to 7 percent of total applications. ARMs offer lower interest rates than the 30-year fixed and can therefore help buyers who are struggling to afford a home.
Home prices will continue to rise as long as supplies are so tight. A monthly read of housing starts did show a sizable gain in single-family home construction in May, but builders are still producing far fewer homes than are needed, and what they are producing is mostly in the move-up or luxury market. The low end is the leanest.
Mortgage rates have not moved much this week but could fall if increasing tensions in the brewing trade war between the U.S. and China push investors to the safe haven of bonds. Mortgage rates loosely follow the yield on the U.S. 10-year Treasury.
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