A For Sale sign appears in front of a home on Oak Street in Patchogue, New York on May 17, 2022.
Steve Post | news day | Getty Images
Mortgage rates rose more than 7% just a month ago, but they’ve fallen more than half a percentage point since then. Still, the volume of applications for mortgage loans fell 0.8% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The results also include an adjustment for Thanksgiving observance.
The average contract rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) fell from 6.67% to 6.49%, with points at 0.68 (including the setup fee) for loans with a 20% down payment stayed.
The weakness remains in funding demand, which was down 13% week-on-week and 86% lower than the same week a year ago. Strange, considering Black Knight says around 100,000 more current borrowers could now benefit from refinancing with the recent rate cut.
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 are benefiting from building concessions, particularly those offerings where the home builder lowers the mortgage rate.
“Economy is weakening here and abroad, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes. Buying activity picked up slightly after adjusting for the Thanksgiving holiday, but the fall in interest rates was still not enough to restart refinancing activity,” noted Joel Kan, an MBA economist.
The share of adjustable rate mortgage loans in application activity rose slightly to 9%, down from the range of about 12% a month ago when rates were higher. However, ARM stock was down about 3% earlier this year when the 30-year fixed rate hovered near a record low. ARMs offer lower interest rates but higher risk.
Mortgage rates weren’t moving much earlier this week, but that could change by the end of the week as the much-anticipated monthly jobs report is due to be released. Any unexpected swing in either direction will directly affect mortgage rates.