Record low mortgage rates are proving to be unhelpful as homebuyer demand falls for the sixth time in seven weeks. Mortgage application volume dropped 0.5% last week compared to the week prior, according to CNBC. And the annual comparison, which remains high, has begun to steadily fall. Mortgage applications to purchase a home for the week were still 16% higher than one year ago, but fell by 3%. This is now the lowest level since May. One Mortgage Brokers Association economist blames the drop in homebuyer demand on the sparse housing supply and rising home prices.
Loan amounts have been reaching new highs in the last several weeks due to skyrocketing home prices and comparatively stronger activity on the upper end of the market. Low rates are no longer offsetting these higher prices; in fact they are partially causing them.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to a survey low of 2.98% from 3.01%, with points decreasing to 0.35 from 0.38 (including the origination fee) for loans with a 20% down payment. That rate was more than a full percentage point higher than a year earlier.
Low rates did help demand for refinances, which rose 1% for the week and were 67% higher annually. That is the highest level since August.