Mortgage demand dropped for the third straight week, despite a small dip in average interest rates. The Mortgage Bankers Association (MBA) said yesterday that the average contract interest rate for 30-year fixed-rate mortgages decreased. It went down from 6.98% to 6.92% for conforming loan balances equal to or less than $806,500. Nationally, this move represents a small savings in mortgage expenses for first-time homebuyers.
Our rate just went down again! Currently, the average points for a 30-year fixed-rate mortgage with a 20% downpayment dropped down to 0.67 or 0.66 with the origination fee factored in. This is a significant shift. Currently, mortgage rates are 15 basis points lower than this time last year. Despite these green shoots, mortgage applications to buy a home were down 4% week over week. Purchase applications — the lifeblood of any mortgage market — are booming! They’ve soared 18% over the same week last year.
Refinance activity was also affected, with applications falling by 4% on the week. Refi applications through the roof! They’re up 42% from this time last year, an indication that homeowners are rushing to refinance and reduce their payments while rates are still good. The overall mortgage application volume fell by 3.9% from the previous week. This drop is according to the MBA’s seasonally adjusted index from the previous week.
Joel Kan, an associate vice president of economic and industry forecasting with the MBA, commented on the level of mortgage demand and activity. He remarked on the sluggishness of the spring season, stating, “Refinance activity fell across both conventional and government segments and the overall average refinance loan size was the smallest since July 2024, as potential borrowers hold out for larger rate drops.” This reflects a general sense of caution among borrowers who are holding out for better conditions before moving forward with a refinance.
This is good news, as the overall trend in mortgage demand still shows activity is stronger than this time last year, even with the recent volatility in rates. For the first time in two months, mortgage rates settled into a pretty tight band. In fact, several analysts think we are likely to see a historic move in mortgage rates this Friday. The monthly employment report is usually what propels interest rates to make any big moves.