Mortgage demand has halted once again despite further falling interest rates after a massive 58% weekly spike in refinancing demand last week.
The total application volume has increased by 0.6% from last week, according to the Mortgage Banks Association’s Seasonally Adjusted Index.
The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances fell from 6.39% to 6.34%, below $806,500, with points increasing from 0.54 to 0.57, including the origin fee for a 20% down payment loan. This is the lowest level since September 2024. But that was a weekly average and was particularly volatile last week. Earlier in the week, the mortgage rate following the 10-year Treasury yield fell to its lowest level in three years before the Federal Reserve reduced its rate. However, a few days after the Fed cuts, the fee was about a quarter-percent point.
Refinance demand, which had been a dramatic surge last week ago, only rose 1% for the week, but was 42% higher than the same week a year ago.
“Interest rates have generally risen following the (Federal Open Market Committee) meeting, but remain in the range that should have led to an increase in refinancing activities. The amount of refinancing last week has increased further, and is now 80% higher than four weeks ago, accounting for more than 60% of all application activities.” “Last week’s refinancing was due to government applications, and the amount of VA refinancing has increased by almost 15%.”
Mortgage applications to buy homes are essentially flat, with just 0.3% increase for a week, an increase of 18% from the same week a year ago.
“Demand for home buyers usually tends to decline in the fall, but activity in the purchasing application remains relatively strong now,” Fratantoni added.
Demand for these risky loans was delayed last week after a massive surge in demand for adjustable mortgages. Borrowers were looking for all sorts of savings on monthly payments, but the arm fees are much lower than fixed-rate loans.
Mortgage News Daily Daily rarely began this week, as there were no major economic reports affecting the bond market. There have been several speeches from the Federal Reserve Governor and Chairman Jerome Powell, but nothing different from previous policy statements.
“The Fed’s speech certainly could have an impact, but it depends on the details. The most important comment (Tuesday) came from Federal Reserve Chairman Powell, but did not represent a major deviation from his press conference following the Fed’s announcement last week.” “Nevertheless, some traders were relieved he has not used the opportunity to repeat some of last week’s topics over and over.
