Slight dip in mortgage rates not enough to spark homebuyer demand

Mortgage rates fell for the first time in more than two months last week, but not by enough to spur more demand from would-be homebuyers, according to a weekly survey by the Mortgage Bankers Association (MBA).

The MBA Weekly Mortgage Application Survey showed demand for purchase loans fell 1 percent last week compared to the week before, and was down 41 percent from a year ago.

Applications to refinance rose slightly to 0.2 percent from the previous week, but were down 85 percent from a year ago.

“With most homeowners locked into significantly lower rates, refinance applications continued to run more than 80 percent below last year’s pace, while the refinance share of applications was 28.6 percent – the fifth straight week below 30 percent,” MBA Deputy Chief Economist Joel Kan said in a statement.

Rates for most types of loans were more than three percentage points higher than a year ago, Kan noted, adding to affordability challenges that have put a damper on home sales and housing starts.

Mortgage rates pause

The Optimal Blue Mortgage Market Indices, which are updated daily, show rates on 30-year fixed-rate loans hitting a new 2022 high of 7.16 percent on Oct. 24, before briefly retreating below the 7 percent threshold last week.

For the week ending Oct. 28, the MBA reported average rates for the following types of loans:

For 30-year fixed-rate conforming mortgages (loan balances of $647,200 or less), rates averaged 7.06 percent, down from 7.16 percent the week before. With points decreasing to 0.73 from 0.88 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also decreased to 7.27 percent.

Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $647,200) averaged 6.55 percent, up from 6.53 percent the week before. With points increasing to 0.7 from 0.68 (including the origination fee) for 80 percent LTV loans, the effective rate also increased to 6.75 percent.

For 30-year fixed-rate FHA mortgages rates averaged 6.70 percent, down from 6.79 percent the week before. With points decreasing to 1.18 from 1.59 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased to 7.05 percent.

Rates for 15-year fixed-rate mortgages averaged 6.37 percent, down from 6.39 percent the week before. But with points decreasing to 1.05 from 1.52 (including the origination fee) for 80 percent LTV loans, the effective rate decreased to 6.64 percent.

For 5/1 adjustable-rate mortgages, rates averaged 5.79 percent, down from 5.86 percent the week before. Although points increased to 0.9 from 0.88 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased to 6.13 percent.

This article was written by Matt Carter from Inman News and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].