A home is listed for sale in Chicago, Illinois on March 22, 2024.
Scott Olson | Getty Images
Mortgage rates fell last week to their lowest level since April, but buyers are still struggling to afford today's housing market. As a result, mortgage demand leveled off at a weak pace. According to the Mortgage Bankers Association's seasonally adjusted index, overall mortgage application volume increased just 0.5% compared to the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased from 7.18% to 7.08%, with points on loans at 20% down from 0.65 to 0.63 (inclusive). the processing fee) decreased payment.
Home loan refinance applications, which are most sensitive to weekly interest rate changes, rose 5% for the week and were 7% higher than the same week a year ago.
“Treasury yields continued to fall last week and mortgage rates fell for the second week in a row,” said Joel Kan, MBA vice president and deputy chief economist. “The drop in interest rates led to a slight increase in refinance applications, including another strong week for VA refinances. However, the overall level of refinancing activity remains low.”
The number of mortgage applications to purchase a home fell 2% for the week and was 14% below the same period last year. The decline was due to a 9% decline in FHA applications. These loans are preferred by first-time or lower-income buyers because they allow for significantly smaller down payments than traditional loans.
“While the drop in interest rates is benefiting potential homebuyers, mortgage rates are still much higher than they were a year ago, while inventory for sale remains tight,” Kan added.
Mortgage rates fell slightly earlier this week, but all eyes are now on the monthly consumer price index report, due out on Wednesday. Further inflation will influence the Federal Reserve's next rate hike.
“Forecasts are already clear for core prices to rise 0.3% month-over-month,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “The difference between a score of 0.2 or 0.4 is surprisingly large when it comes to the world of interest rates. A score of 0.1 or 0.5 could easily result in the biggest jump/drop in interest rates in months.”