Mortgage rates remained stable last week, with a slight decrease in average interest rates for 30-year fixed-rate mortgages. Refinance demand was weaker, leading to a 2% decrease in total application volume. However, homebuyers appear to be returning to the market, with a 1% increase in purchase applications compared to the previous week and a 7% increase compared to the same week last year. This increase in purchase activity was largely driven by a 6% rise in FHA applications.
Applications to refinance a home loan decreased by 5% from the previous week, reaching the lowest level in a month, although they were still 63% higher than the same week last year. While mortgage rates remain low, the number of people who can benefit from a refinance is limited, as rates were even lower just three years ago. However, those who purchased a home in the last two years at higher rates are now taking advantage of the opportunity to refinance.
Overall, market focus continues to be on potential trade policy changes, and the Federal Reserve has kept the funds rate at its current level. Despite some headwinds, such as a lack of housing inventory, slowly declining mortgage rates are providing more opportunities for homebuyers. The yearly comparison of mortgage rates is significant due to the low overall volume of mortgage applications.
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