The already competitive housing market is getting even more so, and that is now cutting into mortgage demand.
Even a small drop in interest rates couldn’t bring more buyers in, although it did boost refinance demand slightly. As a result, total mortgage application volume last week was essentially unchanged, falling 0.6% 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 ($548,250 or less) decreased to 3.27% from 3.30%, with points increasing to 0.41 from 0.39, including the origination fee, for loans with a 20% down payment. The rate was 41 basis points lower the same week one year ago.
Applications to refinance a home loan, which are highly sensitive to weekly rate changes, increased 2% from the previous week but were 42% lower year over year. The refinance share of mortgage activity increased to 65.2% of total applications from 63.3% the previous week. Given how much lower rates were a year ago, and even earlier this year, there is a shrinking population of borrowers who can benefit from a refinance.
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