The trend of falling mortgage rates in the past few weeks has been significant, but it seems the rush to refinance has slowed down. Refinance applications dropped by 15% last week, which is a notable decrease. Despite this decline, there has been a substantial increase of 90% compared to the same period last year. The reason behind this surge could be the 23% increase in demand over the last four weeks as mortgage rates have been on the decline.
The average contract interest rate for 30-year fixed-rate mortgages has decreased to 6.50% last week, along with an increase in points to 0.60 from 0.57. This change in rates has resulted in a 32 basis point drop in the last four weeks, making it 81 basis points lower than a year ago. Despite this decrease, mortgage rates are still relatively high according to Joel Kan, an MBA economist. He points out that rates below 5% are more desirable for borrowers; however, with the current rates, many borrowers still have rates above that mark.
Applications for mortgages to purchase homes have also seen a decline, with a 5% drop in the past week, adding to an 8% decrease compared to the same period last year. This decrease might be attributed to the fact that homebuyers are finding it hard to afford the limited inventory available in the market. Although home prices are rising at a slower rate than in previous years, the lack of affordable options continues to be a challenge for potential buyers.
Future Outlook
Looking ahead, even with lower mortgage rates, homebuyers may still face challenges due to limited inventory and rising prices. Nevertheless, with more supply expected to come on the market, there might be more options available for potential buyers. Mortgage rates are continuing to decline, according to a recent survey by Mortgage News Daily. The current trends suggest that there may be some opportunities for those looking to purchase a home, but the overall market conditions remain challenging.
Overall, the recent trends in the mortgage market indicate a mixed picture for both refinancing and home purchases. While lower rates can be beneficial for borrowers, the affordability and availability of homes continue to be major factors influencing the market. It will be interesting to see how these trends evolve in the coming weeks and months and how they will impact the overall housing market.