Last week, mortgage rates dropped once more. Although it wasn’t a significant drop, it was enough to encourage existing homeowners to start looking for ways to save money. The seasonally adjusted index of the Mortgage Bankers Association showed a 5.4% increase in overall mortgage demand over the previous week, driven by the spike in refinances.
For 30-year fixed-rate mortgages with conforming loan sums of $766,550 or less, the average contract interest rate dropped from 6.69% to 6.67%, and for loans requiring a 20% down payment, the points dropped from 0.67 to 0.66. The weekly drop was the third in a row.
The number of home loan refinance applications increased by 27% week over week and by 42% over the same period last year. Because the base volume is still so small, the percentages are high. The majority of borrowers currently have mortgages with rates significantly lower than those currently available. Rates were below 4% from 2020 to the first part of 2022. Last week, mortgage rates were 40 basis points lower than they were a year ago.
Refinances accounted for 46.8% of all mortgage applications, up from 38.7% the week before.
Mortgage applications for homebuying decreased 4% for the week and increased 4% over the same period last year. Over the past few weeks, as more inventory entered the market, buyer demand has been increasing.
Over the last three months, purchase applications have stayed comparatively strong and have increased annually in all but one week. Joel Kan, an MBA economist, stated in a press release that in addition to reduced rates, purchase activity is still bolstered by persistent home demand and inventory that is still expanding steadily in many regions.
According to a different study from Mortgage News Daily, mortgage rates increased 10 basis points to begin this week. That wiped out most of the loss from previous week. However, they may swing any way. Wednesday, when the monthly consumer price index—a measure of inflation—was released.
Matthew Graham, chief operating officer at Mortgage News Daily, stated that the Fed’s final important piece of information before determining whether to make a cut next week is without a doubt Wednesday morning’s CPI data. Naturally, the market is aware of this. Therefore, a significant departure from projections would undoubtedly be sufficient to get things going.
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