(JustPatriots.com)- Mortgage demand plummeted last week despite another drop in mortgage interest rates, CNBC reported on Thursday.
According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume dropped by 9 percent last week compared to the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.19 percent with points falling to 0.65 for mortgages with a 20 percent down payment. During the same week in 2021, the rate was only 3.78 percent.
But even with mortgage rates falling from their recent highs, applications to refinance home loans fell 7 percent last week and were 80 percent lower than the same week the previous year.
While homeowner refinancing may have jumped back after the holiday lull to cause demand to rise throughout much of January, overall, there are still fewer borrowers who benefit from refinancing at today’s rates, so demand is once again falling.
Mortgage applications to purchase a home dropped 10 percent last week and were 41 percent lower year over year.
Both home prices and mortgage rates have been coming down steadily. However, the supply of homes for sale remains very low, which may keep mortgage demand under pressure.
According to Joel Kan, an economist with the Mortgage Bankers Association, things will likely pick up when the spring homebuying season begins, especially with lower interest rates and moderating home price growth which help some buyers to regain purchasing power.
Mortgage rates have been staying in a narrow range over the last few days. But that may change depending on the Federal Reserve. The Fed is expected to hike its interest rate, but that doesn’t necessarily increase mortgage rates.
The January employment numbers coming out on Friday may also have an impact on mortgage rates depending on what the numbers show about the current state of the economy, recession, and inflation.