A sign is posted in front of a home for sale in San Rafael, California, on Aug. 7, 2024.
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Mortgage rates dipped slightly last week, but so did mortgage demand, as housing affordability continues to sideline potential buyers.
Total mortgage application volume fell 6.6% for the 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) decreased to 6.93% from 6.95%, with points increasing to 0.66 from 0.64 (including the origination fee) for loans with a 20% down payment.
“Mortgage rates decreased on average over the week, as markets brushed off unexpectedly strong inflation data. Despite mortgage rates declining, mortgage applications decreased to their slowest pace since the beginning of the year,” said Joel Kan, an MBA economist.
Applications to refinance a home loan, which had been on the rise, dropped 7% for the week but were 39% higher than the same week one year ago. Percentage changes week-to-week have been large simply because the overall volume of refinancing is so low. The vast majority of borrowers today have mortgages with rates significantly lower than what is now being offered.
Applications for a mortgage to buy a home fell 6% for the week but were 7% higher year-over-year. Housing affordability continues to weigh on potential buyers, and economic uncertainty, especially regarding the effect of potential tariffs, are only adding to the pressure.
“Purchase applications were down for the week, as buyers remained on the fence, although loosening inventory may help support activity in the coming months,” Kan added.
Mortgage rates moved slightly higher to start this week, but holiday-shortened weeks tend to see more volatility in the bond market.