A home under construction is seen among completed homes in a new development in Brambleton, Virginia, on Aug. 14, 2024.
Andrew Caballero Reynolds | AFP | Getty Images
Mortgage rates fell for a third straight week last week, but the rush to refinance stalled.
Mortgage refinance applications fell 15% from the previous week, according to the seasonally adjusted Mortgage Bankers Association index. Still, volume was 90% higher than the same week a year ago. That’s likely due to a 23% jump in demand over the past four weeks as mortgage rates have fallen.
The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.50% from 6.54%, with points increasing to 0.60 from 0.57 (including origination fees) for loans with a 20% down payment.
The 30-year fixed rate has fallen 32 basis points in the past four weeks and is 81 basis points lower than a year ago. A basis point is equal to 0.01 percentage point.
“Mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a rapid decline in mortgage rates,” Joel Kahn, a business economist at the CBO, wrote in a statement. “Another point to note is that rates are lower, but they are still 6.5%, which is not low for those borrowers with interest rates below 5%.”
The vast majority of borrowers today have interest rates well below 5%, with rates falling to below 3% in the first two years of the Covid pandemic.
Mortgage applications for a home fell 5% for the week and were down 8% from the same week a year ago. Demand is now at its lowest level since February. Homebuyers are not being affected by the recent price decline because they are still struggling to afford the little that is available for sale. Home prices continue to rise, albeit at a slower pace than in recent years, but more supply is coming onto the market.
“Even with mortgage rates lower, potential buyers may be more selective now that there are more options available,” Kahn added.
Mortgage rates fell further earlier this week, according to a separate survey from Mortgage News Daily.
“The lowest rates in over two weeks may seem like a reason to be excited, but we haven’t learned anything new about current trends that we didn’t know yesterday,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “Simply put, there was a lot of volatility in rates earlier in the month, and we’ve been on a slow, sideways ride since then as we wait for more compelling motivations.”
