Mortgage Demand Pauses Despite Falling Rates
Mortgage demand experienced a stall last week, despite a further dip in interest rates, following a important 58% jump in refinance applications the prior week.According to the Mortgage Bankers Association (MBA),total submission volume edged up just 0.6% week-over-week.
The average contract interest rate for 30-year fixed-rate mortgages (conforming loan balances of $806,500 or less) decreased to 6.34% from 6.39%, with points rising to 0.57 from 0.54. this represents the lowest rate seen as September 2024. Though, the week was marked by volatility; rates initially fell to a three-year low early in the week, influenced by the 10-year Treasury yield, before rising approximately 0.25% following the Federal Reserve’s rate cut declaration.
Refinance demand, while still elevated after the previous week’s surge, only increased by 1% for the week. Though, it remains a ample 42% higher than the same period last year.
Mike Fratantoni, senior vice president and chief economist at the MBA, noted that while rates have generally risen post-FOMC meeting, they remain at a level conducive to increased refinance activity. he highlighted that refinance volume is now 80% higher than four weeks ago, representing over 60% of all application activity, with a significant boost coming from government applications, particularly VA refinance volume which jumped almost 15%.
Purchase applications remained largely unchanged, increasing by a mere 0.3% for the week, but are still 18% higher year-over-year. Fratantoni added that despite the typical seasonal slowdown in fall, purchase activity remains surprisingly robust.
Demand for adjustable-rate mortgages (ARMs), which had seen a surge as borrowers sought lower monthly payments, retreated last week.
Looking ahead, mortgage rates have remained relatively stable at the start of this week, according to Mortgage News Daily, due to a lack of significant economic data. While speeches from Federal Reserve officials,including Chair Jerome Powell,offered no deviation from previous policy statements,some traders were relieved that Powell didn’t reiterate points from last week’s announcement that had previously pushed rates higher.
