Weekly mortgage demand remains stalled, as interest rates stay stubbornly high

Mortgage
rates
didn’t
move
much
last
week,
and
for
the
second
week
in
a
row,
neither
did
mortgage
demand.
Potential
buyers
are
handcuffed
by
exorbitant
costs
and
low
supply,
and
current
homeowners
have
little
to
no
incentive
to
refinance
at
today’s
high
rates.

Total
mortgage
application
volume
last
week
was
essentially
flat,
dropping
0.6%
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
($766,550
or
less)
slipped
to
6.91%
from
6.93%,
with
points
decreasing
to
0.59
from
0.60
(including
the
origination
fee)
for
loans
with
a
20%
down
payment.

Applications
to
refinance
a
home
loan
fell
2%
for
the
week
and
were
5%
lower
than
the
same
week
one
year
ago.
Rates
have
been
hovering
around
7%
for
the
past
few
months,
and
close
to
90%
of
current
borrowers
have
mortgages
with
rates
below
6%.

Applications
for
a
mortgage
to
purchase
a
home
fell
0.1%
from
one
week
earlier
and
were
13%
lower
than
the
year-earlier
week.
Purchase
demand
now
is
about
half
of
what
it
was
in
March
2020,
before
the
Federal
Reserve
dropped
rates
to
zero,
igniting
a
massive
homebuying
boom,
which
wiped
out
already
low
supply.
With
rates
now
double
what
they
were
back
then,
sellers
are
stuck
in
place,
and
buyers
can
afford
far
less.

“Elevated
mortgage
rates
continued
to
weigh
down
on
homebuying.
Purchase
applications
were
unchanged
overall,
although
FHA
purchases
did
pick
up
slightly
over
the
week,”
noted
Joel
Kan,
an
MBA
economist.

Mortgage
rates
bounced
higher
to
start
this
week,
after
new
economic
data
on
manufacturing
came
in
higher
than
expected
and
noted
higher
prices.

“Prices
are
critical
at
the
moment
because
inflation
is
keeping
rates
elevated,”
wrote
Matthew
Graham,
chief
operating
officer
at
Mortgage
News
Daily. “If
inflation
refuses
to
resume
the
downward
trajectory
that
was
in
place
through
the
end
of
2023,
rates
won’t
have
a
compelling
reason
to
rally.”  

Wednesday
brings
more
data
on
growth
in
the
services
sector,
and
Friday
the
all-important
monthly
employment
report
is
released.
Both
could
create
rate
momentum
in
either
direction.