Home for sale in Millbrae, California.
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Mortgage rates saw the biggest one-week decline in more than a year last week, sparking the first increase in mortgage demand in a month.
Total mortgage application volume increased 2.5% last week from 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 ($726,200 or less) decreased from 7.86% to 7.61%, with points increasing from 0, 73 to 0.69 (including origination fees) for loans with 20% down. payment.
“Last week’s rate cut was driven by the U.S. Treasury’s issuance update, the Fed’s dovish tone in the November FOMC statement, and data pointing to a slowing labor market,” said Joel Kan, MBA vice president and deputy chief economist.
Requests to refinance a home loan increased 2% over the week and were 7% lower than the same week a year ago. Mortgage rates are pretty close to what they were this time last year, so there’s not much incentive to refinance. Most homeowners refinanced two years ago, when rates were near record lows. The vast majority of current homeowners have mortgages with rates below 4%.
Mortgage applications to buy a home were up 3% for the week, but were 20% lower than the same week a year ago. The decline in interest rates is still not enough to offset sky-high real estate prices, which continue to rise due to the very low supply of homes for sale.
Mortgage rates started the week slightly higher, but this week features fewer economic events or reports that could influence rates. The combination last week of the Federal Reserve’s pause on interest rates and a lower-than-expected monthly jobs report was the perfect combination for a dramatic rate cut.