Mortgage rates experienced a notable uptick last week, leading to a decrease in overall mortgage demand. According to the Mortgage Bankers Association’s seasonally adjusted index, the total volume of applications dipped by 0.7% compared to the previous week, marking the first decline after a stretch of five weeks.
The average interest rate for 30-year fixed-rate mortgages with conforming loan balances, capped at $766,550, rose to 6.75% from 6.67%. The points, which include the origination fee for loans with a 20% down payment, remained steady at 0.66. This rate is only slightly higher, by 8 basis points, than what it was during the same period last year.
The dip was largely attributed to a decrease in refinance demand, which fell by 3% over the week but remains 41% higher than the same time last year. Despite mortgage rates not being significantly lower than they were a year ago, it appears that low refinancing levels mean any slight change can lead to a significant percentage shift.
Applications for mortgages intended for home purchases, on the other hand, rose by 1% for the week and were up by 6% compared to a year ago. Joel Kan, MBA’s vice president and deputy chief economist, noted that “Conventional and VA purchase applications were the main contributors to this week’s rise in purchase activity on a weekly and annual basis. Buyers stayed active in the market, benefiting from gradually improving inventory and a brighter outlook on the economy and job market.”
As for this week, mortgage rates have remained fairly stable, according to a separate survey conducted by Mortgage News Daily. The market is currently awaiting the Federal Reserve’s meeting on Wednesday, with expectations of a rate cut. However, some experts suggest this might be the last rate cut for a while.
Matthew Graham, COO at Mortgage News Daily, commented, “Markets are aware that the Fed will make a cut and that the dot plot—a quarterly publication reflecting the interest rate outlook—will project a higher rate path than in September. The uncertainty lies in how pessimistic the dot plot will be or how hawkish Fed Chair Jerome Powell may seem to the market.”
