WASHINGTON–After topping 7% just over a month ago, the average rate on the traditional 30-year mortgage has now declined more than 50 basis points.
Nevertheless, mortgage loan application volume decreased 0.8% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.
According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.49% from 6.67%, with points remaining at 0.68 (including the origination fee) for loans with a 20% down payment.
The mortgage analytics firm Black Knight said weakness continues to be seen in refinance demand, which dropped 13% from the previous week and was 86% lower than the same week one year ago.
“Strange, given that roughly 100,000 more current borrowers could now benefit from a refinance with the latest rate drop, according to Black Knight,” CNBC stated.
Meanwhile, the MBA analysis shows mortgage applications to purchase a home gained 4% from the previous week but demand was 41% lower than the same week one year ago.
“Sales of existing homes continue to drop, while newly built home sales are benefiting from builder concessions, specifically deals in which the builder buys down the mortgage rate,” reported CNBC.
‘Still Not Enough’
"The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes. Purchase activity increased slightly after adjusting for the Thanksgiving holiday, but the decline in rates was still not enough to bring back refinance activity," Joel Kan, an MBA economist, said in a statement.
The MBA said adjustable-rate mortgage share of application activity increased slightly to 9%, which is lower than the roughly 12% range a month ago, when rates were higher. The ARM share, however, was about 3% at the start of this year, when the 30-year fixed rate hovered near a record low. ARM's offer lower interest rates but higher risk, the MBA added.