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Consumers seemed unimpressed by the latest drop in mortgage rates. Total mortgage application volume rose just 0.9% compared with the previous week, according to 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) decreased to 6.94% from 7.02%, with points decreasing to 0.61 from 0.65 (including the origination fee) for loans with a 20% down payment. That is the lowest level since March.
“Mortgage rates dropped last week following the latest inflation data and the FOMC meeting,” said Mike Fratantoni, MBA’s SVP and chief economist.
Despite the drop, refinance demand, which is usually sensitive to weekly rate moves, dropped 0.4% for the week but was 30% higher than the same week one year ago. Rates are still slightly higher than they were a year ago.
Mortgage applications to purchase a home rose 2% for the week and were 12% lower than the same week one year ago. Home sales have slowed even more recently amid volatile interest rates. The supply of homes for sale is as pricey as it is lean.
“Purchase volume is still more than 10 percent behind last year’s pace, but MBA is forecasting a pickup in home sales for the remainder of the year as more inventory is hitting the market,” added Fratantoni.
Mortgage rates moved a little bit higher to start this week but then pulled back Tuesday after weaker than expected retail sales data.
“All told, it painted a less upbeat picture for the American consumer compared to a few months ago,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.