A realtor from Coldwell Banker Dynasty TC (left) talks with a potential homebuyer during an open house in Arcadia, California.
Jonathan Alcorn | Bloomberg | Getty Images
Mortgage rates fell slightly last week after the head of the Federal Reserve signaled a possible end to a historic string of rate hikes. The drop was modest, but enough to boost demand from current homeowners looking to refinance their mortgages to lower rates.
The average contract rate for 30-year fixed-rate mortgages with qualifying loan balances ($726,200 or less) fell to 6.48% last week from 6.50% the week before, and points fell to 0.61 from 0.63 (including the origination fee), according to the Mortgage Banker Association’s weekly survey, down payment is 20% of the loan. A year ago the rate was 5.53% in the same week. Mortgage rates fell over the week for all loan types surveyed.
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As a result, home loan refinancing applications rose 10% last week on a seasonally adjusted basis compared to the previous week. However, refinancing needs are still down 44% year-on-year.
“Mortgage applications reacted positively to last week’s drop in interest rates, as the Fed signaled that the federal funds rate may be paused at current levels amid expectations that slower inflation and tighter financial conditions will slow economic and job growth,” wrote Joel Kan. , MBA’s deputy chief economist, in release.
Mortgage applications to buy a home were up 5% this week but down 32% from a year earlier. Interest rates haven’t really dropped enough to offset high home prices. Prices have been cooling since last summer, but have heated up again this spring due to high demand and very little supply.
Mortgage rates rose sharply to start the week, according to a separate survey by Mortgage News Daily. The increase was driven by investors’ belief that the regional banking crisis may be easing. However, all bets are off when the government releases the Consumer Price Index, a monthly report on inflation, on Wednesday. Any major deviation from expectations, in either direction, could decisively affect bond yields and, by extension, mortgage rates.