Mortgage rates dipped slightly last week, but that wasn’t enough to boost demand. Total mortgage application volume fell 3.9% compared to 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 ($806,500 or less) decreased to 6.92% from 6.98%. Points dropped to 0.66 from 0.67, including the origination fee, for loans with a 20% down payment.
Despite the slight drop, mortgage rates have been moving within a narrow range over the last two months.
Refinance activity, which is highly sensitive to rate changes, declined by 4% for the week. However, it was still 42% higher than the same week one year ago. This time last year, rates were 15 basis points higher.
“Refinance activity fell across both conventional and government segment and the overall average refinance loan size was the smallest since July 2024, as potential borrowers hold out for larger rate drops,” said Joel Kan, an MBA economist, in a statement.
Applications to purchase a home also dropped by 4% week-over-week, but were up 18% compared to the same period last year. Still, despite higher mortgage demand, closed home sales remain lower than last year.
The primary factor driving increased purchase applications is greater housing supply. Inventory levels are now at their highest in five years. But even with more options available, sales activity is not as strong as expected.
Mortgage rates started this week relatively flat. The next significant movement could happen on Friday when the monthly employment report is released — a key indicator for the broader economy and interest rate outlook.
(CNBC)
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