A house for sale with a “For Sale” real estate sign in the yard in the spring or summer. There are no people.
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Mortgage demand fell last week compared to the previous week, despite the continued decline in interest rates, according to the bank’s report Mortgage Bankers AssociationSeasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) fell to 6.83% from 7.07%, with points increasing to 0.60 from 0.59 (including origination fee) for low-interest loans. By 20%. The group said on Wednesday. Even with the recent decline, rates are still much higher than they were at the beginning of the Covid pandemic.
“With positive news about lower inflation and the FOMC [Federal Open Market Committee] “Expecting a pivot toward lower interest rates, the 30-year fixed mortgage rate is at its lowest level since June 2023,” said Mike Fratantoni, MBA senior vice president and chief economist.
“At least until last week, borrowers’ response to this interest rate movement was fairly tepid,” Fratantoni said.
Home loan refinancing applications fell 2% for the week ending Friday, after jumping 19% the week before, according to MBA. However, refinancing demand was 18% higher than in the same week one year ago.
Home mortgage applications fell 1% over the week and were 18% lower than the same time last year.
Despite the decline in demand, the Mortgage Bankers Association forecast good news ahead for the market, although it expects a “moderate recession” in the first half of next year.
“We expect this monetary policy path to support further declines in mortgage interest rates, in time for the spring housing market,” the group said, referring to the Fed’s recent indication that it is looking to cut its benchmark interest rate several times a year. Next. year. “We expect modest growth in new and existing home sales in 2024, supporting growth in purchases.”
The association said it expects mortgage origination volume to increase 22% in 2024 to $2 trillion, with a 14% increase in purchase volume and a 56% jump in refinancing demand.
Due to the Christmas holiday next week, the MBA will release mortgage applications data for the weeks ending December 22 and 29 on January 3.
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