Home listed for sale on March 22, 2024 in Chicago, IL.
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Mortgage rates fell last week to their lowest level since April, but buyers are still struggling to afford today's housing market. As a result, mortgage demand stabilized at a weak pace. Total mortgage application volume rose just 0.5% from 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 7.08% from 7.18%, with points falling to 0.63 from 0.65 (including origination fees) for low-interest loans. By 20%. Premium.
Home loan refinancing applications, which are most sensitive to weekly rate changes, rose 5% during the week and were 7% higher than the same week one year ago.
“Treasury yields continued to decline last week and mortgage rates fell for the second week in a row,” said Joel Kahn, MBA vice president and deputy chief economist. “The decline in interest rates led to an uptick in refinancing applications, including another strong week for VA refinances. However, the overall level of refinancing activity remains low.”
Mortgage applications to purchase a home fell 2% during the week and were 14% lower than the same period a year earlier. The decline was driven by a 9% decline in FHA applications. These loans are preferred by first-time or low-income buyers because they allow much lower down payments than traditional loans.
“While the downward move in interest rates benefits potential homebuyers, mortgage rates are still much higher than they were a year ago, while for-sale inventory remains tight,” Kahn added.
Mortgage rates fell slightly to start this week, but all eyes are now on the monthly CPI report, due on Wednesday. Another reading on inflation will influence the Fed's next move on interest rates.
“Forecasts are already clear in their forecast of a 0.3% increase in base rates, month-on-month,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “The difference between an outcome of 0.2 or 0.4 is surprisingly huge when it comes to the world of interest rates. An outcome of 0.1 or 0.5 could easily lead to the biggest interest rate jump/drop in months.”
