File photo: “For Sale” sign
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Consumers don’t appear to be too impressed with the recent decline 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 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) fell from 7.02% to 6.94%, and points for loans with a 20% down payment fell from 0.65 (including origination fees) to 0.61, the lowest level since March.
“Mortgage rates fell last week following the latest inflation data and the FOMC meeting,” said Mike Fratantoni, MBA senior vice president and chief economist.
Refinance demand, which is typically sensitive to week-to-week interest rate fluctuations, fell 0.4% for the week but was still up 30% compared to the same week a year ago. Interest rates are still slightly higher than a year ago.
Mortgage applications to buy a home rose 2% this week, down 12% from the same week a year ago. Home sales have slowed further recently due to fluctuating interest rates. Not only is the supply of homes for sale low, but prices are also high.
“While purchase volume is still more than 10% below last year’s pace, the MBA expects home sales to recover over the remainder of the year as more inventory comes onto the market,” Fratantoni added.
Mortgage rates rose slightly earlier this week but fell on Tuesday after retail sales data came in below expectations.
“Overall, the outlook is less rosy for U.S. consumers than it was a few months ago,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.
