For the fourth time in the past five weeks, mortgage rates dropped last week, and buyers seem to be taking notice. However, current homeowners’ desire to refinance dropped precipitously.
This resulted in a virtually unchanged overall volume of mortgage applications last week, up just 0.3% from the week before, as per the seasonally adjusted index provided by the Mortgage Bankers Association.
For 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less, the average contract interest rate dropped from 7.41% to 7.37%. For loans requiring a 20% down payment, points increased to 0.64 from 0.62 (including the origination fee).
Applications for mortgages to buy a house increased by 5% over the course of the week, but they were still 19% less than they were a year ago.
According to MBA economist Joel Kan, “rates have dropped more than 50 basis points over the last six weeks, which has helped to spur a small increase in purchase applications.” “The persistently low supply of existing homes on the market is the reason why the purchase market is still depressed.”
Refinancing applications fell 9% on the week and increased by just 1% over the same period last year. Refinancing accounted for 30.6% of all mortgage applications, down from 32.4% the week before.
Although mortgage rates have increased by 88 basis points in the last year, the majority of present homeowners refinanced two years ago, during a period of historically low rates.
Very few people can now gain from a refinance as a result.
According to Matthew Graham, chief operating officer of Mortgage News Daily, rates have not changed much this week. In fact, over the last six business days, the average 30-year fixed rate has moved by less than 0.02% by the end of the day on five of those days.
Graham stated, “It’s convenient that most of the soft moves have been in a friendly direction.” “The outcome is a gradual decline to somewhat lower two-month lows, with rates having already reached two-month lows last week.”
