Decreasing Mortgage Demand Despite Lower Rates

Decreasing Mortgage Demand Despite Lower Rates - camreo

Decreasing Mortgage Demand Persists: Mortgage Rates Fall, But Demand Drops for Fourth Consecutive Week. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume experienced a 1.4% decline last week compared to the previous week.

This ongoing trend of Decreasing Mortgage Demand indicates a worrisome pattern for the housing market.

The average contract interest rate for 30-year fixed-rate mortgages, which adhere to conforming loan balances ($726,200 or less), decreased to 6.81% from 6.91%. Points associated with these loans fell to 0.66 from 0.83 (including the origination fee) for borrowers who made a 20% down payment. That was still, however, the second-highest weekly average rate of 2023 to date.

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Applications to refinance a home loan fell 1% for the week and were 42% lower than the same week a year ago. The refinance share of mortgage activity increased to 27.3% of total applications from 26.7% the previous week.

Applications for a mortgage to purchase a home slipped 2% for the week and were 27% lower than a year ago.

“Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers,” said Joel Kan, MBA’s deputy chief economist. “There was less of a decline in government purchase applications last week, which was consistent with a growing share of first-time home buyers in the market.”

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Mortgage rates have not moved much this week, as there has been little economic data to push them in either direction.