Recent data shows that mortgage rates have been on the decline for the fourth consecutive week. Despite this decrease, the response from both current homeowners and potential homebuyers has been lackluster. The average contract interest rate for 30-year fixed-rate mortgages fell to 6.44%, with points also decreasing. However, the increase in total mortgage application volume was only a mere 0.5% compared to the previous week.
Although mortgage rates have dropped more than 80 basis points from a year ago, there has been a minimal impact on demand for refinancing. Refinance applications actually decreased slightly from the previous week. The majority of borrowers currently have rates that are already below 6%, making it less enticing to go through the expense of refinancing unless they can significantly lower their current rate.
Applications for mortgages to purchase homes did see a slight increase of 1% for the week. However, when compared to the same week from the previous year, there was a 9% decrease. Despite the lower rates, there hasn’t been a substantial increase in home purchase applications. This may be due to prospective homebuyers taking a more cautious approach, waiting for rates to drop even further and for-sale inventory to increase.
Joel Kan, MBA’s vice president and deputy chief economist, noted that while mortgage rates have been relatively stable, purchase applications have not seen significant movement. Homebuyers are being more patient, taking advantage of lower rates and increasing inventory. The lack of significant economic data influencing mortgage rates indicates a sense of stability in the market for the time being.
The recent decrease in mortgage rates has not had a significant impact on the behavior of both current homeowners and potential homebuyers. Refinancing activity remains subdued, as most borrowers already have rates below 6%. Home purchase applications have seen a modest increase, but are still significantly lower than the previous year. The market is currently characterized by cautious optimism, with individuals waiting for further decreases in rates and improvements in for-sale inventory before making significant moves in the housing market.