A sign advertising a home for sale is displayed outside a Manhattan building on April 11, 2024 in New York City.
Spencer Platt | Getty Images
Mortgage rates are much higher than they were at the beginning of this year, but they eased slightly last week after several weeks of consecutive increases. That was enough to spark some new demand, especially for refinancing.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) fell to 7.18% from 7.29%, with points holding steady at 0.65 (including origination fee) for loans with a 20% down payment. %.
“Treasury interest rates and mortgage rates fell last week on news of a slowing labor market, with wages growing at the slowest pace since 2021, and the Fed's announced plans to ease quantitative tightening in June and maintain its view that another rate hike is necessary.” “Unlikely,” said Mike Fratantoni, senior vice president and chief economist at MBA.
The FHA rate fell below 7% for the first time in three weeks, a welcome sign for first-time buyers, who tend to use FHA loans.
“First-time homebuyers account for nearly half of purchase loans, and government lending programs are an important source of financing for these homebuyers. The increase in FHA activity is a sign that this market segment is active,” Fratantoni added.
The decline in interest rates increased refinancing demand by 5% during the week, although it was still 6% lower than the previous week. Interest rates are 70 basis points higher than they were a year ago, so there are very few borrowers who can benefit from refinancing. A basis point is one-hundredth of a percentage point.
Mortgage applications to purchase a home rose 2% during the week, but were still 17% lower than the same week a year earlier. Affordability is hitting potential buyers hard, as home prices continue to rise. The lack of supply keeps competition high, resulting in very few trades.
Mortgage rates fell further to start this week. The next big chunk of economic data will come next week, with the release of the monthly CPI. This could move interest rates sharply in either direction, depending on what it says about inflation.
