Mortgage rates barely budged last week, but homebuyers may be inching back to the market despite strong spring headwinds.
Refinance demand was weaker, however, pushing total application volume down 2% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased to 6.71% from 6.72%, with points dropping to 0.60 from 0.64, including the origination fee, for loans with a 20% down payment.
“Markets remained focused on potential trade policy changes, while the Fed held the funds rate [at] its current level,” wrote Joel Kan, an MBA economist, in a release.
Applications for a mortgage to purchase a home rose 1% for the week and were 7% higher than the same week one year ago. That small gain, after weeks of declines, was enough to put demand at the highest level in nearly two months.
“Last week’s purchase activity was driven primarily by a 6 percent increase in FHA applications, as the combination of loosening housing inventory and slowly declining mortgage rates have presented this segment of buyers with more opportunities,” said Kan.
Applications to refinance a home loan decreased 5% from the previous week to the lowest level in a month. They were 63% higher than the same week one year ago. Last year, mortgage rates were 22 basis points higher.
There are precious few who can benefit from a refinance today, given record-low mortgage rates just three years ago, but those who may have purchased a home in the last two years at higher rates are now taking advantage. The annual comparison is so large only because the overall volume is so low.