A planned development completed in Ashburn, Virginia, on August 14, 2024.
Andrew Caballero Reynolds | AFP | Getty Images
Mortgage rates dropped again last week, and while the drop wasn't significant, it was enough to motivate current homeowners to look for some savings. The rise in refinancings was behind a 5.4% increase in overall mortgage demand compared to the previous week, according to the seasonally adjusted Mortgage Bankers Association index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) fell to 6.67% from 6.69%, with points falling to 0.66 from 0.67 (including origination fees) for low-interest loans. By 20%. Premium.
Home loan refinancing applications rose 27% week to week and were 42% higher than in the same week one year ago. The percentages are large, likely because the base volume is still very small. Most borrowers today have mortgages with interest rates much lower than what is being offered now. From 2020 through the first half of 2022, rates were less than 4%. Mortgage rates last week were 40 basis points lower than they were in the same week one year ago.
Refinancing's share of mortgage activity rose to 46.8% of total applications compared to 38.7% in the previous week.
Home mortgage applications fell 4% during the week and were 4% higher than the same week one year ago. Demand from homebuyers has been rising over the past few weeks, with more inventory coming onto the market.
“Purchase orders have remained relatively strong and have shown year-over-year gains in all but one week of the past three months. In addition to lower prices, purchasing activity remains supported by sustained housing demand and inventory that continues to gradually grow in many markets.” Joel Kahn, an MBA economist, wrote in a press release:
Mortgage rates rose 10 basis points to start this week, according to a separate survey by Mortgage News Daily. This erased much of last week's decline. But it could swing in either direction on Wednesday, with the release of the monthly consumer price index, an indicator of inflation.
“There is no doubt that Wednesday morning's CPI data is the last important piece of the puzzle the Fed will receive before it decides to 'cut or not to cut' next week,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “The market knows that, of course. As such, a significant deviation from expectations would certainly be enough to get things moving.”
