Mortgage demand flattens even as interest rates reach their lowest level since March

Consumers appeared underwhelmed by the latest decline in mortgage rates. Total mortgage application volume increased by only 0.9% from the previous week, as per the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) declined to 6.94% from 7.02%, while points fell to 0.61 from 0.65 (including the origination fee) for loans with a 20% down payment. This marks the lowest level since March.

According to Mike Fratantoni, MBA’s senior vice president and chief economist, mortgage rates fell last week in response to the most recent inflation statistics and the [Federal Open Market Committee] meeting.

Despite the dip, refinance demand, which is typically sensitive to weekly rate changes, fell 0.4% for the week but was 30% higher than the same week a year ago. Rates are marginally higher than they were a year ago.

Mortgage applications to buy a home increased 2% this week and were 12% lower than a year ago. Home sales have fallen even further in recent months due to unpredictable interest rates. The availability of properties for sale is low, while prices remain high.

Purchase volume is still more than 10% below last year’s pace. Still, MBA anticipates a pickup in home sales for the rest of the year as additional inventory enters the market,” Fratantoni noted.

Mortgage rates rose slightly to begin the week but fell Tuesday following weaker-than-expected retail sales figures. “All told, it painted a less upbeat picture for the American consumer compared to a few months ago,” stated Matthew Graham, chief operating officer at Mortgage News Daily.