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Mortgage rates rose slightly last week, but it was enough to ease some of the tension from what was a briefly hot refinancing market. This caused total mortgage application volume to decline 1.3% during the 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) rose to 6.14% from 6.13%, with points increasing to 0.61 from 0.57 (including origination fees) for low-interest loans. 20% premium. The rate was 139 basis points higher in the same week one year ago.
“Data from last week showed that the economy is still growing at a strong pace, even as inflation remains low. As a result, mortgage rates rose modestly,” Mike Fratantoni, MBA's senior vice president and chief economist, said in a statement.
Home loan refinance applications fell 3% during the week, but were still 186% higher than the same week one year ago. The vast majority of borrowers today have mortgages with rates well below 5%, but those who may have purchased a home in the past year or two may be able to take advantage of refinancing at lower rates today.
Home mortgage applications rose 1% during the week and were 9% higher than the same week a year ago. The fall market appears to be heating up a bit, with real estate brokerages like Redfin reporting more home tours in the past few weeks. However, some buyers may be sitting on the sidelines, anticipating interest rates to move lower in the coming months.
“Inventories of new and existing homes have been increasing throughout 2024, meaning potential buyers have properties to consider and now have somewhat lower mortgage rates resulting in better affordability,” Fratantoni added.
Mortgage rates fell slightly again to start this week, as bond yields fell in the wake of an escalation in bombings in the Middle East conflict. The next big move in interest rates could come on Friday, with the release of the all-important monthly employment report.
