Low Mortgage Rates Boost Refinancing Applications, But Shortage of Homes for Sale Slows Purchase Activity

Government refinance applications have increased by 7% due to the availability of lower mortgage rates, according to data from the Mortgage Brokers Association. This marks the third consecutive week of declining home borrowing costs, with the average rate for 30-year mortgages dropping to 7.01% for the week ending on May 17th.

The decrease in interest rates has motivated borrowers to take advantage of refinancing options, particularly those offered by the Department of Veterans Affairs (VA). Joel Kan, the MBA vice president and deputy chief economist, noted that both conventional and government refinance applications have seen an increase as a result.

However, purchase activity has declined this week due to a lack of for-sale houses. While more borrowers are opting for refinancing options, the shortage of available homes on the market is negatively impacting purchase activity. Kan highlighted this issue as a factor in the overall housing market trend.

Overall, while lower mortgage rates have motivated borrowers to take advantage of refinancing options, it appears that limited availability of homes for sale may be hindering purchase activity in some areas.