A for sale sign is displayed outside of a home for sale on August 16, 2024 in Los Angeles, California.
Patrick T. Fallon | AFP | Getty Images
Mortgage rates didn’t move last week, but demand for new home loans continued to weaken. Both homebuyers and current homeowners are hampered by today’s higher interest rates.
Total mortgage application volume decreased 2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) remained unchanged at 7.02%, with points increasing to 0.63 from 0.62 (including the origination fee) for loans with a 20% down payment.
Applications to refinance a home loan dropped 7% for the week and were 5% higher than the same week one year ago. Interest rates are now 24 basis points higher than they were a year ago, so there are precious few who can benefit. The vast majority of homeowners have mortgages with rates well below what is being offered today.
Applications for a mortgage to purchase a home fell 0.4% from one week earlier and were 7% lower than the same week one year ago.
“Purchase activity decreased slightly, but applications for FHA purchase loans were a bright spot, increasing by 2 percent,” said Joel Kan, vice president and deputy chief economist at the MBA.
“New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months.”
Mortgage rates have not moved much to start this week either, and Wednesday’s Federal Reserve meeting is not expected to bring any surprises or tradeable news.
“Even Powell would be hard pressed to shake things up too much considering the mildly positive cue from inflation data and the ongoing policy uncertainty as a counterbalance,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “That said, one can never truly rule out a volatile reaction to a Powell presser, but the odds are certainly lower this time around.”