Mortgage demand is finally coming out of the basement as interest rates continue to fall.
According to the Mortgage Bankers Association’s seasonally adjusted index, total application volume increased 3% last week compared to the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) fell from 7.61% to 7.41%, and for loans with a 20% down payment fell from 0.67 to 0.62 points (inclusive). the processing fee). .
“US bond yields continued to fall as new data pointed to a weaker economy and further signs of cooling inflation. Most mortgage rates in our survey fell, with the 30-year fixed mortgage rate falling to its lowest rate in two months,” said Joel Kan, MBA deputy chief economist. “Mortgage applications rose to their highest level in six weeks but remain at very low levels.”
The number of home loan refinancing applications rose 2% this week and was just 4% lower than the number in the same week a year ago. Rates today are about 75 basis points higher than a year ago, but more than double what they were two years ago, when there was a massive refinancing boom. Most homeowners with mortgages have much lower interest rates than they do today.
Mortgage applications to buy a home rose 4% week over week, but were still 20% lower than a year ago.
“The average loan size on a purchase application was $403,600, the lowest level since January 2023. This is consistent with other sources of home sales data showing a gradually increasing share of first-time home buyers,” Kan added.
While mortgage demand is increasing slightly from historic lows, the real estate market is still extremely weak. Existing home sales fell to their lowest level in 13 years in October, according to a new report from the National Association of Realtors.
Mortgage rates fell slightly this week, but analysts don’t expect any major moves in the near term.
“The market has clearly entered holiday mode, with low volume and liquidity greasing the skids for random volatility without fundamental justification,” wrote Matthew Graham, chief operating officer of Mortgage News Daily.
Don’t miss these stories from CNBC PRO: