Last week saw a slight decrease in mortgage rates, resulting in a consecutive two-week surge in mortgage demand. Compared to the previous week, total mortgage applications rose by 7.1%, according to the Mortgage Bankers Association’s seasonally adjusted index.
On average, the contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) dropped to 6.84% from 7.02%, with points decreasing to 0.65 from 0.67, including the origination fee for loans with a 20% down payment.
Mike Fratantoni, Senior Vice President and Chief Economist at the Mortgage Bankers Association, attributed the decline in mortgage rates to recent economic data indicating a weaker service sector and a less robust job market. He noted an increase in the unemployment rate and downward revisions to job growth in previous months.
Consequently, applications to refinance a home also saw a significant rise of 12% for the week, marking a 5% increase compared to the same week last year. Fratantoni emphasized that despite these substantial percentage increases, refinance activity remains relatively low, primarily consisting of borrowers who secured loans at or near peak rates in the past two years
However, while mortgage applications for home purchases increased by 5% for the week, they still lagged behind by 11% compared to the previous year. This can be attributed to homebuyers facing not only higher interest rates but also grappling with limited inventory and soaring home prices. Although there are signs of inventory improvement with the arrival of the spring season, it remains insufficient to meet the demand, particularly for starter homes.
