Mortgage application volume barely moved last week, falling 0.5% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Rates, meanwhile, dropped back a little bit last week, but they’re still near a 22-year high.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 7.06% from 7.16%, with points falling to 0.73 from 0.88 (including the origination fee) for loans with a 20% down payment. That rate was 3.24% the same week one year ago.
The slight drop was enough to move the needle a tiny bit on refinance demand. Those applications rose 0.2% for the week but were still 85% lower than the year before. There are now precious few qualified borrowers who don’t already have a rate lower than what is being offered today.
Mortgage applications to buy a home fell 1% for the week and were 41% lower year over year. Real estate agents and homebuilders alike say buyer traffic has slowed to a crawl. Agents say today’s buyers see no sense of urgency, and some may be waiting for rates to pull back more significantly.
“Apart from the ARM loan rate, rates for all other loan types were more than three percentage points higher than they were a year ago. These elevated rates continue to put pressure on both purchase and refinance activity and have added to the ongoing affordability challenges impacting the broader housing market, as seen in the deteriorating trends in housing starts and home sales,” said Joel Kan, an MBA economist.
Mortgage rates started this week slightly higher again, according to Mortgage News Daily, but all ears are now on Wednesday’s meeting of the Federal Reserve. While the Fed is widely expected to raise its funds rate by 0.75 percentage point, investors are focused more on what it will signal for future rate moves. Some believe the Fed is getting ready to end or at least slow its rate hikes.
“If they go so far as to throw that bone to the market, it would likely be good for rates at first,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “If they completely shy away from it, rates are going to have a bad [Wednesday] afternoon. … Either way, volatility risk is high.”