Mortgage demand will fall again even as rates fall further

A “For Sale” sign in front of a home in Sacramento, California, on Monday, Dec. 5, 2022.

David Paul Morris | Bloomberg | Getty Images

Low mortgage rates are currently drawing some homeowners into the refinancing market, but not enough to offset the drop in demand from home buyers. .

The number of mortgage applications fell by 1.9% last week compared to the previous week, according to the latest data from the Mortgage Bankers Association.

The average contract interest rate for 30-year fixed-rate mortgages with a reasonable loan balance ($647,200 or less) decreased to 6.41% from 6.49%, with points decreasing to 0.63 from 0.68 (including the initial fee) for loans with a 20% discount. pay. The 73 basis points were lower than last month but still more than three percentage points higher than last year.

Loan refinancing applications rose 5% for the week but were still 86% lower than the same week last year. There are still a few existing borrowers who could benefit from refinancing at today’s high interest rates. Mortgage refinancing activity rose to 28.7% of total applications from 26.1% last week.

Home mortgage applications fell 3% for the week and were 40% lower than the same week last year.

“Sales slowed last week, with the decline in typical home loan applications offset in part by an increase in FHA and USDA loan applications,” said Joel Kan, an MBA economist in advertising.

The average loan for home buyer applications decreased to $387,300 – its lowest level since January 2021, consistent with strong government applications and accelerating home prices, according to Kan.

Mortgage rates haven’t changed much this week, and no major economic news has made headlines. The next big change will come next week, with months expected on the weather.

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