Mortgage rates dropped sharply last week, and while that helped to prolong gains in refinancing, homebuyer demand seemed unimpressed.
Total mortgage application volume was essentially flat, rising just 0.4% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.09% from 6.17%, with points decreasing to 0.53 from 0.56, including the origination fee, for loans with a 20% down payment. That was the lowest level since September 2022.
Applications to refinance a home loan increased 4% last week from the week before and were 150% higher than the same week one year ago, when rates were 79 basis points higher. Refinancing has been on a bit of a tear lately, as rates drop. While the comparisons to a year ago are quite large, it is important to take into account that refinancing was quite low at this time last year.
Applications for a mortgage to purchase a home dropped 5% for the week and were 12% higher year-over-year. While lower mortgage rates are improving affordability, home prices are still slightly higher than they were at this time last year and economic uncertainty is weighing heavily on consumers.
