A For Sale sign appears in front of a home on Oak Street in Patchogue, New York on May 17, 2022.
Steve Pfost | News day | Getty Images
Mortgage rates climbed more than 7% just a month ago, but since then have fallen more than half a percentage point. Still, the volume of mortgage applications fell 0.8% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The results also include an adjustment for Thanksgiving observance.
The average contractual interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) fell from 6.67% to 6.49%, with points remaining at 0.68 (including origination fees) for loans with a 20% down payment.
The weakness continues to be in refinancing demand, which fell 13% from the previous week and was 86% lower than the same week a year ago. Strange, given that around 100,000 additional current borrowers could now qualify for refinancing with the latest rate cut, according to Black Knight.
Mortgage applications to buy a home were up 4% from the previous week, but demand was 41% lower than the same week a year ago. Existing home sales continue to decline, while new home sales benefit from builder concessions, particularly deals in which the builder buys out the mortgage rate.
“The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes. Buying activity rose slightly after adjusting for the Thanksgiving holiday, but the rate cut still hasn’t been enough to bring back refinancing activity,” noted Joel Kan, an economist with an MBA.
The share of adjustable rate mortgages in demand activity rose slightly to 9%, down from the range of around 12% a month ago when rates were higher. ARM’s share, however, was around 3% at the start of this year, when the 30-year fixed rate hovered near a record low. ARMs offer lower interest rates but higher risk.
Mortgage rates haven’t moved much to start this week, but by the end of the week that could change as the highly anticipated monthly jobs report is about to be released. Any unforeseen movement in one direction or the other will have a direct effect on mortgage rates.