Mortgage rates fell to the lowest level in a month, boosting refinance activity and offsetting weak demand from homebuyers. As a result, total mortgage application volume rose 1.8% last week 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 6.42% from 6.51%, with points increasing to 0.62 from 0.61, including the origination fee, for loans with a 20% down payment.
“Given the evolving situation in the Middle East and its impact on energy and commodity prices, mortgage rates declined last week,” Joel Kan, an MBA economist, said in a release.
Applications to refinance a home, which are most sensitive to weekly interest rate moves, increased 5% for the week and were 15% higher than the same week a year ago.
Homebuyers remain on the sidelines due to continued economic uncertainty. Applications to purchase a home dropped 1% weekly and were 3% lower than the same week one year ago, marking the second consecutive week that applications were below last year’s level.
