A for sale sign is seen in front of a home on Oak Street in Patchogue, New York, on May 17, 2022.
Steve Pfaust | Newsday | Getty Images
Mortgage rates rose more than 7% just a month ago, but have since fallen by more than half a percentage point. However, the volume of applications for mortgage loans fell 0.8% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The results also include an adaptation for Thanksgiving.
The average contract interest rate for 30-year fixed-rate mortgages with matching loan balances ($647,200 or less) fell to 6.49% from 6.67%, with points remaining at 0.68 (including origination fees) for loans with a 20% down payment. .
Weakness remains in refinancing demand, which was down 13% from the previous week and down 86% from the same week a year ago. Strange, given that roughly 100,000 other existing borrowers could now benefit from refinancing with the latest rate drop, according to Black Knight.
Mortgage applications for a home were up 4% from the previous week but demand was 41% lower than the same week one year ago. Existing home sales continue to decline, while sales of newly built homes benefit from builder’s concessions, specifically deals in which the builder purchases a mortgage rate.
“The economy is weakening here and abroad, which should slow inflation and allow the Federal Reserve to slow the pace of rate hikes. Buying activity increased slightly after adjusting for the Thanksgiving holiday, but the drop in rates is still not enough to restart refinancing activity.” Joel Kahn, MBA economist noted.
The share of adjustable-rate mortgages increased application activity slightly to 9%, down from the roughly 12% range a month ago, when rates were higher. However, ARM’s share was around 3% at the start of this year, when the 30-year constant rate was hovering near a record low. ARM offers lower interest rates but higher risks.
Mortgage rates haven’t moved much to start this week, but by the end of the week that could change, as the hotly anticipated monthly employment report is due. An unexpected swing in either direction will have a direct impact on mortgage rates.