Weekly mortgage demand stalls, even though rates drop to lowest since April 2023

Mortgage rates fell last week for the fourth straight week, but neither current homeowners nor homebuyers seemed particularly impressed.

Total mortgage application volume rose just 0.5% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — $766,550 or less — decreased to 6.44% from 6.50%, with points decreasing to 0.54 from 0.60, including the origination fee, for loans with a 20% down payment. That was the lowest rate since April 2023. Rates have come down more than 80 basis points from a year ago.

Despite the drop, demand to refinance decreased 0.1% from the previous week. It was, however, 85% higher than the same week one year ago. The trouble is that the vast majority of borrowers have mortgages with rates well below 6%. Doing a refinance is really only worth the expense if you can shave at least 75 basis points off your current rate.

Applications for a mortgage to purchase a home rose 1% for the week but were 9% lower than the same week one year ago.

“As observed in recent weeks, despite lower rates, purchase applications have not moved much. Prospective homebuyers are staying patient now that rates are moving lower and for-sale inventory has started to increase,” said Joel Kan, MBA’s vice president and deputy chief economist.

Mortgage rates have been flat to start this week, with no significant economic data to influence them. The next big move could come with the monthly employment report at the end of next week.