Although there was no change in mortgage rates last week, the demand for new house loans kept declining. The higher loan rates of today are a hindrance to both prospective and existing homeowners.
The seasonally adjusted index from the Mortgage Bankers Association showed a 2% drop in the overall volume of mortgage applications from the previous week.
on 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less, the average contract interest rate stayed at 7.02%, while points on loans with a 20% down payment increased from 0.62 to 0.63 (including the origination fee).
Home loan refinance applications fell 7% for the week and increased 5% over the same period last year. Few people are able to take advantage of the 24 basis point increase in interest rates from a year ago. Most homeowners have mortgages with rates that are significantly lower than what is now available.
Mortgage applications to buy a property were down 7% from the same week last year and down 0.4% from the previous week.
Joel Kan, vice president and deputy chief economist at the MBA, stated that while purchase activity had somewhat slowed, FHA purchase loan applications remained a bright spot, rising by 2%.
Sales of both new and existing homes concluded 2024 strongly, and we anticipate a slow increase in buying activity in the upcoming months assuming mortgage rates stay stable and the supply of available homes declines.
The Federal Reserve meeting on Wednesday is not anticipated to produce any surprises or tradeable news, and mortgage rates have not changed much to begin the week either.
According to Matthew Graham, chief executive officer at Mortgage News Daily, “even [Fed Chair Jerome] Powell would be hard pressed to shake things up too much given the mildly positive cue from inflation data and the ongoing policy uncertainty as a counterbalance.” Although it is impossible to completely rule out an explosive response to a Powell press conference, the likelihood is undoubtedly reduced this time.
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