Mortgage rates have been trending downward, but demand slowed last week, largely due to fewer refinance applications, suggesting the industry shouldn’t expect a mini-refinancing boom.
Mortgage application volumes fell 10.1% in the week ended August 16 compared with the previous week, according to data released on Wednesday. Mortgage Bankers Association (Master of Business Administration).
MBA’s survey, which covers 75% of all retail residential mortgage applications in the United States, found that the seasonally adjusted refinance index fell 15% from the previous week. Taking into account the number of applications in the same week a year ago, the index was 90% higher.
The seasonally adjusted purchasing index fell 5% from a week ago, hitting the lowest level since February 2024.
“After weeks of financial market volatility that caused mortgage rates to fall rapidly, mortgage rates and mortgage applications have now trended lower,” Joel Kan, MBA vice president and deputy chief economist, said in a statement. to stability.
“Home sales are slowing despite rising inventory levels. Even with lower mortgage rates, potential buyers may be more selective due to more options.
Loan originators recently told house line Interest rates are still too high for the refinance boom, and homeowners aren’t triggering new loans with lower interest rates.
“We’ve had clients start calling and asking, ‘Is now the right time to refinance?’ because everyone is expecting a rate cut in September. atlantic bay mortgage group. “Just because interest rates are starting to come down, does that really make sense to everyone? We’ve just reached the top of the mountain.
Mortgage rates have stabilized this week after falling sharply earlier this month along with a spike in unemployment. This raises people’s awareness of Fed cuts at the September meeting.
The average interest rate on a 30-year fixed-rate conforming mortgage fell to 6.68% on Wednesday from 7% at the beginning of the month, according to the HousingWire Mortgage Rate Center.
MBA’s survey shows that the average contract interest rate for 30-year fixed-rate conforming loans (with balances of $766,550 or less) fell to 6.50% last week, down 4 basis points (bps) from the previous week. The average interest rate for jumbo loans (balances over $766,550) fell 10 basis points to 6.68%.
Most loan officials believe the refinancing boom won’t happen until mortgage rates drop into the 5% range, since 88% of Fannie Mae’s single-family mortgage borrowers have note rates below 6%.
Meanwhile, the refinance share of mortgage activity fell to 46.3% last week from 48.6% the previous week.
this federal housing administration During this period, Federal Housing Administration (FHA) refinancing applications bucked the trend and increased for the sixth consecutive week, rising from 13.5% to 15.6% of total applications.
this U.S. Department of Veterans Affairs This week, VA’s share of total applications fell from 16.8% to 15.3%. besides U.S. Department of Agriculture During the same period, the U.S. Department of Agriculture (USDA) share increased from 0.3% to 0.4%.
