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Mortgage rates edged higher last week, but that was enough to cool the briefly hot refinance market a bit. That resulted in a 1.3% decline in total mortgage applications for the week, according to the Mortgage Bankers Association's Seasonally Adjusted Index.
The average contract interest rate for a 30-year fixed-rate mortgage with a qualifying loan balance ($766,550 or less) increased from 6.13% to 6.14%, and the payment for loans with 20% down increased from 0.57 (including origination fee) to 0.61. The rate rose 139 basis points in the same week a year ago.
“Data released last week showed that the economy is still growing at a solid pace even as inflation continues to decline. As a result, mortgage rates edged higher,” said Mike Fratantoni, senior vice president and chief economist at MBA. A release.
Applications for home loan refinancing fell 3% this week, but are still 186% higher than the same week a year ago. Today, mortgage rates for the vast majority of borrowers are well below 5%, but those who may have purchased a home in the past year or two may be able to benefit from refinancing at the current lower rates.
Mortgage applications for home purchases increased 1% this week and were 9% higher than the same week a year ago. The market does appear to be picking up in the fall, with real estate brokerages like Redfin reporting an increase in home tours over the past few weeks. However, some buyers may be taking a wait-and-see approach, anticipating interest rates to move even lower in the coming months.
“Inventory of both new and existing homes is increasing in 2024, which means potential buyers have properties to consider, and mortgage rates are now lower, leading to better affordability,” Fratantoni added.
Mortgage rates edged lower again to start the week as an escalating conflict in the Middle East sent bond yields lower. The next big move in interest rates could come on Friday with the release of the all-important monthly jobs report.