Data photo: “For Sale” sign
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Consumers appear to be unfazed by the latest drop in mortgage rates. Total mortgage applications increased just 0.9% from the previous week, according to the Mortgage Bankers Association’s Seasonally Adjusted Index.
The average contract interest rate for a 30-year fixed-rate mortgage with qualifying loan balance ($766,550 or less) dropped from 7.02% to 6.94%, and points for a loan with 20% down dropped from 0.65 (including the origination fee) to 0.61 paid. This is the lowest level since March.
“Mortgage rates fell last week following the latest inflation data and the Federal Open Market Committee (FOMC) meeting,” said Mike Fratantoni, senior vice president and chief economist at MBA.
Despite the decline, refinancing demand, which is typically sensitive to weekly interest rate changes, fell 0.4% this week but was 30% higher than the same week a year ago. Rates remain slightly higher than a year ago.
Mortgage applications for home purchases increased 2% this week, down 12% from the same week a year ago. Home sales have even slowed recently due to interest rate fluctuations. The supply of homes for sale is both expensive and scarce.
Fratantoni added: “Purchasing volumes are still more than 10% behind last year, but MBA predicts home sales will pick up throughout the rest of the year as more inventory comes to the market.”
Mortgage rates edged higher at the start of the week but fell back on Tuesday on weaker-than-expected retail sales data.
“All in all, this paints a less optimistic picture for U.S. consumers than a few months ago,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote.
