- Mortgage rates fell to 6.88% last week, the lowest in two months, but total mortgage application volume dropped 1.2%, with refinance applications down 4% despite a 45% year-over-year rise, per the Mortgage Bankers Association (MBA).
- Purchase applications remained flat week-over-week, up just 3% from a year ago, as rising resale supply meets persistent high prices and low inventories, while rates continued to decline this week by 0.22%, driven by bond demand amid economic slowdown fears, according to Mortgage News Daily.
- Joel Kan of MBA linked the rate drop to weaker consumer spending and job market sentiment, noting an 8% FHA refinance increase, though overall demand lags despite lower borrowing costs in a cautious housing market.
Mortgage interest rates slid to 6.88% last week for 30-year fixed-rate loans with conforming balances of $766,550 or less, the lowest since mid-December, yet total mortgage application volume dipped 1.2%, defying expectations of a demand boost, as reported by the Mortgage Bankers Association (MBA). Joel Kan, MBA’s vice president and deputy chief economist, tied the rate drop to softening Treasury yields amid weaker consumer spending data and a gloomier outlook on the economy and jobs, though applications to purchase homes stayed flat week-over-week – up just 3% from a year ago – while refinance applications fell 4% despite a 45% surge compared to last year’s higher-rate environment. The disconnect between falling rates and stagnant demand underscores a housing market where resale supply is ticking up as homes linger unsold, yet stubbornly high prices and lean inventories continue to throttle affordability.
The trend of declining rates persists into this week, with Mortgage News Daily noting a 0.22% drop in top-tier 30-year fixed rates over four days – a modest but notable shift in a month of tight ranges – driven by rising bond demand as markets brace for a global growth slowdown tied to tariffs and cost-cutting pressures, per Matthew Graham, the outlet’s COO. Refinance activity, which spiked earlier this year, shows signs of fatigue, though Kan highlighted an 8% uptick in FHA refinances, a glimmer of resilience in a segment sensitive to rate shifts. Purchase applications, however, remain tepid, reflecting a market where lower rates – down 16 basis points from a year ago – aren’t enough to jolt buyers facing elevated home prices and a supply still far below historical norms, even as points eased to 0.61 from 0.66 for 20% down loans.
This rate retreat, now at a two-month low, hints at a broader economic recalibration, but the muted mortgage response suggests deeper hurdles—buyers and refinancers alike are weighing not just borrowing costs but job security and price trends in a landscape shaped by cautious consumer sentiment. The MBA data reveals a refinance boomlet fading despite rates dipping below 6.9%, while purchase demand’s 3% year-over-year creep signals a market inching toward balance, not a breakthrough. With bonds in vogue and rates edging lower still-the question lingers: will affordability pressures and economic unease keep demand in check, or can sustained rate relief finally spark a housing rebound?
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