Patchogue, N.Y.: A For Sale sign hangs in front of a house in Patchogue, New York, on June 1, 2024.
Steve Pfost | Newsday | Getty Images
Mortgage rates moved slightly lower again last week, keeping refinance demand on the rise.
Applications to refinance a home loan jumped 10% compared with the previous week and were 33% higher than the same week one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. That came after a 12% gain the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.95% from 6.97%, and points remained unchanged at 0.64 (including the origination fee) for loans with a 20% down payment.
“Mortgage rates moved slightly lower last week, which led to the pace of refinance applications reaching its strongest week since October 2024,” said Joel Kan, vice president and deputy chief economist at the MBA. “The average loan size for refinance borrowers increased, as these borrowers tend to be more responsive for a given change in rates.”
Roughly 17% of homeowners with a mortgage have interest rates either at or above 6%, according to Redfin. That’s the highest level since 2016. With rates now near 7%, however, there are still very few who can benefit from a refinance, given both the rate and the cost. The percentage increases may be large week to week, but they are coming off a very low volume.
Applications for a mortgage to purchase a home declined again, falling 2% for the week. Demand was 2% higher than the same week one year ago. Potential buyers are still facing a pricey and lean market. Most of the activity is now happening on the higher end.
“The average loan size for a purchase application increased to its highest level since March 2022 at $456,100, partially driven by fewer FHA purchase applications but more VA loans compared to the previous week,” Kan added.
Mortgage rates moved very slightly higher to start this week, according to a separate survey from Mortgage News Daily. Critical data on inflation Wednesday, the monthly consumer price index, however, could make for a more definitive move.
“There’s plenty of anxiety over this one as early year inflation data is notoriously more difficult to forecast,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “In addition to forecasting difficulty, markets are also eager for clarity on whether inflation continues stalling at prevailing levels or begins to make renewed progress toward the 2% target. Needle-threading is always possible, but any major indication in one direction or the other will likely give rates a big push in the logical direction.”
