Mortgage applications increased by 3% last week and rates dropped to around 7.29% for a 30 year mortgage.
“In recent weeks, rates have dropped by half a percent, but potential homebuyers continue to hold out for lower rates and more inventory. This dynamic is reflected in the latest data showing that existing home sales have fallen to a thirteen-year low," Sam Khater, Freddie Mac’s chief economist, said.
Last week the 30-year fixed rate mortgage (FRM) averaged 7.29%, which is down from the previous week when it averaged 7.44%. A year ago the rate was 6.58%. The 15-year FRM averaged 6.67%, also down from the previous week when it averaged 6.76%. A year ago at this time, the 15-year FRM averaged 5.9%.
In its latest forecast the Mortgage Bankers Association predicted that rates would fall to 6.1% by the end of the year and 5.5% by the end of 2025. Rates spiked close to 8% in October.
As far as applications are concerned, the Refinance Index increased 2% from the previous week and was 4% lower than the same week one year ago. The seasonally adjusted Purchase Index increased 4% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 20% lower than the same week one year ago.
“Mortgage applications increased to their highest level in six weeks, but remain at very low levels," MBA’s Vice President and Deputy Chief Economist Joel Kan said. "Purchase applications were up almost four percent over the week, on a seasonally adjusted basis, as both conventional and government purchase loans saw increases. The average loan size on a purchase application was $403,600, the lowest since January 2023. This is consistent with other sources of home sales data showing a gradually increasing first-time homebuyer share.”
While the boost in refinance applications seems to be positive, "the level of refinances continues to be well below historical averages, given that most borrowers already have a rate well below current market rates," Kan said.
