House in Discovery Bay, California, United States, Thursday, November 7, 2024.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
Mortgage rates rose last week for a fourth straight week. This caused already very weak mortgage demand to fall further. Total mortgage applications fell 3.7% from the previous week, according to the Mortgage Bankers Association’s Seasonally Adjusted Index. Additional adjustments have been made due to the New Year’s Day holiday.
The average contract interest rate for a 30-year fixed-rate mortgage with qualifying loan balance ($766,550 or less) increased from 6.97% to 6.99%, and points dropped from 0.72 (including origination fee) to 0.68 for a loan with 20% down payment.
Home loan refinancing applications increased 2% from the previous week but were down 6% from the same week a year ago. Rates are currently 18 basis points higher than a year ago. As for weekly increases, refinancing volume is so low right now that the percentage deviation is larger than normal.
Mortgage applications for home purchases fell 7% this week and were down 15% from the same week a year ago. There is a much greater supply of homes for sale now than there was last January, but higher interest rates and higher home prices are clearly keeping buyers on the sidelines.
“Purchase applications for both conventional and government loans declined, with weekly growth falling to the lowest level since February 2024,” said Joel Kan, MBA vice president and deputy chief economist. Financing applications are still up, but compared to recent lows, this increase is entirely driven by increases in VA refinances, which continue to show weekly fluctuations.
Mortgage rates started the week higher, with the average 30-year fixed rate on Tuesday at 7.14%, according to a separate Mortgage News Daily survey. Economic data is the driver.
Matthew Graham, chief operating officer of MND, noted: “Inflation in the ISM services sector is one of the most serious factors, but the rise in job vacancies is not helping. The spike in yields was instantaneous but supported by Very good control.
More economic data will be released on Wednesday, the Federal Reserve will release minutes of its meeting, and the all-important monthly jobs report will be released on Friday. These will either keep interest rates on an upward trajectory or change the trend in the new year.
