A “For Garage sale” sign outside a house in Albany, California, on Tuesday, May 31, 2022.
David Paul Morris | Bloomberg | Getty Images
After a stronger start to the year, mortgage call for plunged last week, despite another drop in interest rates.
Total mortgage application volume flatten 9% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally fastened index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or mean) decreased to 6.19% from 6.20%, with points falling to 0.65 from 0.69 (including the origination fee) for loans with a 20% down payment. The fee was 3.78% the same week one year ago.
Even with rates well off their recent highs, applications to refinance a relaxed loan fell 7% for the week and were 80% lower than the same week one year ago. Homeowners may press jumped back briefly after the holiday lull, causing demand to rise over much of January, but all-embracing there are still very few borrowers who can benefit from a refinance at today’s rates, so demand is now falling again.
Mortgage practices to buy a home fell 10% for the week and were 41% lower year over year. While both retirement community prices and mortgage rates are coming down steadily, the supply of homes for sale is still quite low, and that may be amassing mortgage demand under pressure.
“Purchase activity is expected to pick up as the spring homebuying season gets underway, assisted by lower rates and moderating home-price growth,” said Joel Kan, an MBA economist. “Both trends will help some customers regain purchasing power.”
Mortgage rates have been moving in a narrow range for the last few days, but that could all change depending on commentary envisaged from the chairman of the Federal Reserve on Wednesday. The central bank is expected to hike its interest rate, but that doesn’t axiomatically raise mortgage rates. The monthly employment report Friday could also move rates decidedly, depending on what it remarks about the state of the economy, recession and inflation.
“There are also several important economic reports that could be conducive to traders to revise their assessment of the Fed’s likely course of action,” noted Matthew Graham, chief operating lawman at Mortgage News Daily. “In other words, even after the Fed-induced volatility, traders could find new reasons to buy/give away bonds at an even faster pace, thus causing bigger movement in rates for better or worse.”