On August 16, 2022, a for sale sign was posted in front of a home in Monterey Park, California.
Mortgage rates fell slightly last week, but not enough to fuel any recovery in consumer demand for home loans.
Total mortgage application volume declined 2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand is at its lowest level since 2000. It hit a similar low in July.
Mortgage applications to purchase a home were down 1% for the week and were down 18% from the same week a year ago. Potential home buyers struggle not only with higher interest rates, but also with inflation in the economy as a whole and fear that house values will fall.
The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) fell to 5.45% last week from 5.47% the week before, dropping points from 0.80 to 0.57 (including the origination fee) for loans with a 20% down payment. A year ago, the percentage was just over 3%.
While mortgage rates have fallen slightly from recent highs, few borrowers can take advantage of a refinancing. Those applications were down 5% for the week and were down 82% from the same week a year ago.
Mortgage rates haven’t changed much this week, but new economic data expected on Wednesday may change that. The Federal Reserve is slated to release the minutes of its latest meeting, providing more insight into its thinking, but investors are likely more interested in the monthly retail sales report, also due Wednesday.
“This one report wouldn’t be enough to change the story, but if it’s significantly stronger or weaker than expected, interest rates could be in motion well before the Fed Minutes come out at 2 p.m. ET,” said Matthew Graham, chief operating officer from Mortgage News Daily.