Residential homes in Discovery Bay, California, USA, on Thursday, November 7, 2024. Mortgage rates in the USA rose to their highest level since July.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates rose for the fourth straight day last week. This resulted in the already very weak demand for mortgages falling even further. According to the Mortgage Bankers Association's seasonally adjusted index, overall mortgage application volume fell 3.7% compared to the previous week. An additional adjustment was made for the New Year holiday.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased from 6.97% to 6.99%, with points on loans at 20% down from 0.72 to 0.68 (inclusive). the processing fee) decreased payment. This is the highest rate since July 2024.
The number of home loan refinancing applications rose 2% compared to the previous week, but was 6% lower than the same week a year ago. Interest rates are now 18 basis points higher than a year ago. As far as weekly growth goes, the refinance volume is currently so low that the percentages are higher than normal.
Mortgage applications to purchase a home fell 7% for the week, 15% lower than the same week a year ago. The supply of homes for sale is significantly greater now than it was last January, but higher interest rates and higher property prices are clearly holding buyers back.
“Purchase applications declined for both conventional and government loans, falling to the slowest weekly increase since February 2024,” said Joel Kan, MBA vice president and deputy chief economist. “Despite higher interest rates, refinance applications increased, but the increase compared to recent lows was entirely due to an increase in VA refinances, which continue to experience weekly fluctuations.”
Mortgage rates rose earlier this week, with the 30-year fixed average at 7.14% as of Tuesday, according to a separate survey from Mortgage News Daily. Economic data was the driving factor.
“The inflation component of ISM Services was one of the worst culprits, but increased job offers didn't help. The increase in returns was immediate but fairly limited,” noted Matthew Graham, chief operating officer at MND.
More economic data comes on Wednesday with the release of Federal Reserve meeting minutes and on Friday with the all-important monthly employment report. These will either keep rates on an upward trend or potentially change the trend for the new year.