Mortgage rates took another dip, yet buyers are not applying in droves like before. According to CNBC, mortgage application volume actually decreased this week by 5.1% compared to last week. The average interest rate for a 30-year fixed-rate mortgage with conforming loan balances of up to $510,400 dropped from 3.20% to 3.14%. Mortgage Banker’s Association says these low rates will more than likely remain low for the future. Demand for refinances and purchase applications experienced slight weekly drops as well, but still remain much higher than a year ago.
Applications to refinance a home loan, which are most sensitive to weekly rate moves, fell 7% for the week but were 84% higher annually. Generally, if a borrower can shave 75 basis points off their current rate, it makes financial sense to refinance. So many borrowers have already refinanced that there may not be significant interest for doing so. Still, at today’s low rates, close to 18 million borrowers with good credit scores could benefit from a refinance, according to calculations by Black Knight, a mortgage data and analytics firm.
“MBA’s forecast calls for rates to remain at these low levels, which will continue to spur strong refinance activity and offer homeowners relief in the form of lower monthly mortgage payments during these uncertain economic times,” said the association’s forecaster Joel Kan.