After rising throughout the majority of 2022, mortgage rates hit 7% last month, but have since fallen more than half a percentage point as inflation begins to cool and the Fed slows the pace of rate hikes. Though the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $647,200 or less decreased to 6.49% from 6.67% last week, refinance demand remains weak, and mortgage loan application volume is also on the decline, CNBC reports.
Despite the fact that roughly 100,000 more borrowers could currently benefit from a refinance with the latest rate drop, refinance demand last week was 13% lower than the week prior and was 86% lower than the same week one year ago.
“The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes. Purchase activity increased slightly after adjusting for the Thanksgiving holiday, but the decline in rates was still not enough to bring back refinance activity,” noted Joel Kan, an MBA economist.