A house under construction sits between completed homes at a new development in Brambleton, Virginia, on August 14, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images
Mortgage rates fell for a third straight week last week, but the refinancing boom paused for now.
Applications for home loan refinancing fell 15% from the previous week, according to the Mortgage Bankers Association’s Seasonally Adjusted Index. However, volume was 90% higher than the same week a year ago. This is likely due to a 23% surge in demand caused by lower mortgage rates over the past four weeks.
The average contract interest rate for a 30-year fixed-rate mortgage with qualifying loan balance ($766,550 or less) fell from 6.54% to 6.50%, while the payment for loans with 20% down increased from 0.57 (including origination fee) to 0.60%.
Over the past four weeks, 30-year fixed rates have fallen 32 basis points and are 81 basis points lower than a year ago.
“After weeks of financial market volatility that resulted in a rapid decline in mortgage rates, mortgage rates and mortgage applications have now stabilized,” MBA economist Joel Kan wrote in a release. “Another thing to note is that the interest rate is indeed lower, but it is still 6.5%, which is not low for those borrowers with interest rates below 5%.”
Today, interest rates for the vast majority of borrowers are well below 5%, having fallen below 3% during the first two years of the pandemic.
Mortgage applications for home purchases fell 5% this week and were down 8% from the same week a year ago. Demand is currently at its lowest level since February. Homebuyers have not been affected by the recent fall in house prices as they still struggle to afford the few properties available for sale. Home prices continue to rise, albeit at a slower pace than in past years, and there is more supply on the market.
“Even if mortgage rates are lower, potential buyers may be more picky because there are more choices,” Kan added.
Mortgage rates began falling further this week, according to a separate survey from Mortgage News Daily.
“The lowest rates in more than two weeks seem worthy of more enthusiasm, but we haven’t learned anything new about current trends that we didn’t know yesterday,” wrote Mortgage News Daily Chief Operating Officer Matthew Graham. “Simple. “There was a lot of interest rate movement earlier this month, and since then we’ve been in a slow, largely sideways grind as we wait for more compelling motivations.”
