The average contract interest rate for 30-year, fixed-rate mortgages with conforming loan balances of $726,200 or less fell from 6.48% to 6.45% last week, sending overall mortgage demand 2.9% higher compared with the previous week, CNBC reports. Applications to refinance a home loan rose 5% but were still 61% lower year-over-year, and because the majority of today’s homeowners have mortgages with interest rates far below today’s rate, refinance demand is expected to remain low.
Mortgage applications to purchase a home increased 2% for the week, but were still 35% lower year-over-year. A slight improvement in housing affordability is luring in a small share of sidelined buyers, but experts predict that rates will move higher in the coming months.
“Home-price growth has slowed markedly in many parts of the country, which has helped to improve buyers’ purchasing power,” said Joel Kan, an MBA economist in the release. “While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications.”
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