The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less decreased from 7.08% to 7.01%, and for loans with a 20% downpayment, points decreased from 0.63 to 0.60, including origination fees.
Mortgage refinance applications increased 7% this week and are 21% higher than the same week a year ago. Rates last week were just 32 basis points higher than a year ago, and the gap is narrowing. Even with the week's increase, demand remains at very low levels, as the majority of borrowers today are borrowing at rates significantly lower than they are currently being offered.
“The decline in interest rates from recent high rates has prompted some borrowers to take action, increasing refinance applications for both conventional and government-backed loans,” said Joel Kan, MBA vice president and deputy chief economist. “VA refinances have increased by double digits for the third consecutive week, but current refinance levels remain well below historical averages.”
Mortgage applications to purchase a home fell 1% this week and are down 11% compared to the same week a year ago. While rising mortgage rates are certainly a drag on homebuying, today's buyers still face very low supply, stiff competition and fierce bidding wars.
Mortgage rates haven't moved much so far this week, and little reaction is expected from the Federal Reserve's meeting minutes due to be released on Wednesday.
“In this environment of transparency and frequent speeches from Fed members, it's unlikely that the minutes will spark any dramatic developments,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “This is a bit of a paradigm shift for some market watchers who have historically seen rates spike or fall based on the minutes.”