After steadily rising for three weeks, mortgage rates dropped slightly last week. This resulted in a slight increase in refinance activity. The Mortgage Bankers Association's seasonally adjusted index shows that homebuyers have slowed their activity, leaving mortgage demand basically flat.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 5.84% from 5.98%, with points decreasing to 0.64 from 0.77, including the origination fee, for loans with a 20% down payment.
While applications to refinance mortgages rose 2% in the week, they were 80% lower compared to the same week a year ago. The refinance share of mortgage activity increased to 30.3% of total applications from 29.7% the previous week.
After rising more steadily the week before, mortgage demand to buy a house increased 0.1%. It was however 24% lower year-over-year.
Joel Kan, an MBA economist, stated that "Overall, purchase activity has declined in recent months because of the quick jump mortgage rates, high home values, and growing economic uncertainty." "The average purchase amount dropped to $413500, which highlights the ongoing downward trend in mortgage rates since reaching a record high of $460,000 in March 2022."
The loan size drop is likely due lower price growth, higher mortgage rates, and buyers not being allowed to borrow as much.
Mortgage interest rates rose after the brief drop and have continued to rise this week, according another report from Mortgage News Daily. The average rate on the 30-year fixed is now approaching 6% again.