A sign advertising a home for sale is posted outside a building in Manhattan on April 11, 2024 in New York City.
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Mortgage rates are significantly higher than they were earlier this year, but they fell slightly last week after rising for several weeks in a row. This was enough to spark new demand, especially for refinancing.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased from 7.29% to 7.18%, and the points for loans with a 20% down payment remained unchanged at 0.65 points (including origination fees). Ta.
“Last week, with the job market slowing, wage growth at its slowest pace since 2021, and the Federal Reserve announcing plans to ease quantitative tightening in June, further rate hikes are unlikely. “Unlikely,” said Mike Fratantoni, MBA senior vice president and chief economist.
Federal Housing Administration loan rates are below 7% for the first time in three weeks, a welcome sign for first-time buyers who tend to take out FHA loans.
“First-time homebuyers account for about half of purchase loans, and government lending programs are an important source of financing for these homebuyers. The increase in FHA activity reflects the fact that this segment of the market is active. It’s a sign of that,” Fratantoni added.
Refinance demand rose 5% this week due to lower interest rates, but was still 6% lower than the same month last year. With interest rates up 70 basis points compared to a year ago, very few borrowers will benefit from refinancing. A basis point is one-hundredth of a percentage point.
The number of applications for mortgages to buy homes increased by 2% on the week, but was still down 17% from the same week last year. As home prices continue to rise, affordability is hitting potential buyers hard. Supply is tight, competition is fierce, and bargains are few and far between.
Mortgage interest rates have fallen further this week. The next important economic indicator will be the release of the monthly consumer price index next week. Depending on what happens with inflation, interest rates could move sharply in either direction.
