After rising at the end of the year, mortgage rates fell sharply last week. That has led to demand from current home owners hoping to save their monthly payments, but has done little to motivate home buyers.
As a result, the number of mortgage applications rose by only 1.2% last week compared to the previous week, according to the data. of the Mortgage Bankers Association.
The average contract interest rate for 30-year fixed-rate mortgages with reasonable credit balances ($647,200 or less) decreased last week to 6.42% from 6.58%, with Credit remaining at 0.73 (including origination fee) for loans with 20% down. pay. One year ago, that rate was 3.52%.
“Mortgage rates declined last week as markets reacted to data showing a weakening economy and slower wage growth. All types of loans in the survey saw declines in rates,” said Joel Kan, an MBA economist.
A home loan advertisement for sale or refinance at Bank of America in New York.
Scott Mill | CNBC
The drop in prices led to a 5% increase in home loan refinancing applications. However, the total is 86% lower than the same week last year. Even with rates lower than the previous high of more than 7% last fall, at the current rate only 270,000 borrowers can benefit from a re funding, according to Black Knight, a mortgage technology and analytics company. Last year, with half the current rate, about 7 million borrowers could benefit.
Home mortgage applications fell 1% for the week and were 44% lower than the same week last year. That’s the lowest reading since 2014. Consumers today are not only struggling with high interest rates but falling supply. They are also seeing price drops and may be waiting to see how low their prices go.
So far this week mortgage rates have been rising by a narrow margin. The market is looking at the next release of the monthly consumer price index scheduled for Thursday. If it shows that inflation is easing further, mortgage rates may fall further.