The mortgage market is all over the map at this moment. The most recent data appears to reflect only modest declines in interest rates and application activity. The Mortgage Bankers Association (MBA) today reported that the average contract interest rate for 30-year fixed-rate mortgages decreased to 6.70%. This is a significant drop from the previous rate of 6.71% for conforming loan balances at or below $806,500. However, this downturn occurs within an overall landscape of changing transit and freight demand patterns and new market realities.
Combined with the overall fall in interest rates, the points on these mortgages also ticked up, climbing to 0.62 from 0.60. This change incorporates the origination fee for loans with a 20% down payment. It is indicative of a complex change in the costs of securing a mortgage.
Despite the decrease in interest rates, overall mortgage application volume still dropped. That’s down by 1.6% from last week. The MBA’s SA index pointed out that the full volume of mortgage applications was down from week-over-week. Meanwhile, the volume of new applications for home purchases reached its highest level since early 2022. They were up 2% from last week and now 9% higher than this time last year. That surge marks the most applications to purchase a home since late January’s peak level. This expansion was mostly driven by a 3% uptick in traditional purchase.
This is all making buyers increasingly optimistic and eager to reenter the market. For lower-income borrowers, government loans decreased by 2%. This complex backdrop underscores the varied responses of distinct segments of the market. That’s because each segment reacts differently to interest rate changes and changes in overall economic conditions.
“Overall purchase activity has shown year-over-year growth for more than two months as the inventory of existing homes for sale continues to increase, a positive development for the housing market despite the uncertain near-term outlook,” – Joel Kan, vice president and deputy chief economist at the MBA.
Even though mortgage rates are starting this week a little lower, we’re still stuck in a pretty tight range. That’s 21 basis points higher than the average this week last year. It points to the awful market conditions all homebuyers today still must endure.