Mortgage rates started this holiday-shortened week a hair lower. Looking at the past few weeks paints a different story for homebuyers and those looking to refinance. Indeed, the average contract interest rate for 30-year fixed-rate mortgages has recently reached 6.98%. This is an increase from the previous rate of 6.92% for conforming loan balances up to $806,500. This was the third straight week of increasing mortgage rates, now at their highest point since January.
Even as rates increased, the overall demand to buy a home proved amazingly resilient. Mortgage applications for home purchases increased by 2% over last week. In fact, they are 18% higher than where they stood the same week a year ago. This sustained buyer demand is a signal that high mortgage rates have not scared off every homebuyer.
When it comes to overall change through refinancing, the outlook is a bit more bleak. Demand for refinances continues to be strong, 37% higher than the same week a year ago. This week, applications to refinance home loans fell by 7%. Conventional refinances were the hardest hit, down 6%, but VA refinancing applications are down 16%.
Joel Kan, an economist at the Mortgage Bankers Association, noted that “Conventional refinances were down 6%, and VA refinances dropped 16%.” This underscores the growing competition in the market for borrowers to refinance their current mortgages.
Both 30-year fixed-rate mortgages points have decreased modestly. As measured by their DTI, they dropped from 0.69 to 0.67 when including origination fee on loans with 20% down payment. This small cut can provide some level of tortilla chip relief to borrowers during times of uncertainty with rates.
The story doesn’t end there, according to Matthew Graham, chief operating officer at Mortgage News Daily, who discussed with us the broader economic context shaping these trends. He stated, “The Consumer Confidence Index was stronger than expected, but one of its components raised concern over the labor market.” This feeling reflects the ambiguity in the economy right now. These changes might have a significant effect on mortgage rates and the mood of future home buyers.
The Mortgage Bankers Association’s seasonally adjusted index reported these changes in mortgage applications, reflecting the dynamic landscape of home financing as buyers navigate rising rates and shifting economic indicators.