Mortgage applications rose for the first time in weeks as home loan rates dipped to their lowest levels in about 1 1/2 years, according to the Mortgage Bankers Association (MBA)
The MBA’s weekly applications survey for the week ended Sept. 6 reported a 1.4 percent increase in overall mortgage-application volume, boosted by a 2 percent rise in home-purchase applications, according to data released by the organization on Sept. 11.
The average 30-year fixed rate mortgage fell to 6.29 percent last week, marking the sixth consecutive week of declines and a level not seen since February 2023.
Joel Kan, vice president and deputy chief economist at the MBA, attributed the drop in mortgage rates to declining U.S. Treasury yields, which have been influenced by cooling inflation data and expectations for an interest-rate cut by the Federal Reserve.
“Treasury yields have been responding to data showing a picture of cooling inflation, a slowing job market, and the anticipated first rate cut from the Federal Reserve later this month,” Kan said in a statement.
Refinancing activity also increased by 1 percent last week and was 106 percent higher than the same week a year ago, the MBA data showed.
“With rates almost a full percentage point lower than a year ago, refinance applications continue to run much higher than last year’s pace,“ Kan said. ”However, there is still somewhat limited refinance potential as many borrowers still have sub-5 percent rates. It is a positive development that there are homeowners who can benefit from a refinance as rates continues to move lower.”
Despite the uptick in refinancing activity last week, it remains far below pre-pandemic levels, when mortgage rates were around half of what they are today.
Mortgage rates appear on track for another weekly drop as the average 30-year fixed rate mortgage fell to 6.11 percent on Sept. 11, according to the Mortgage News Daily rate index.
The ongoing decline in mortgage rates has been closely tied to falling yields on the 10-year Treasury note, a key benchmark for long-term interest rates. After touching a recent peak of around 4.7 percent in April, the 10-year yield has seen steady declines, helping to bring down borrowing costs for homebuyers.
While mortgage rates have been falling, other factors continue to challenge the housing market.
“Despite the drop in rates, affordability challenges and other factors such as limited inventory might still be hindering purchase decisions,” Kan said.
A recent report from the National Association of Realtors (NAR) showed that existing-home sales saw a slight 1.3 percent increase in July, breaking a four-month sales decline. Still, sales remain down by 2.5 percent from a year earlier and inventory remains tight, with total housing supply up by just 0.8 percent from the previous month.
NAR chief economist Lawrence Yun said in a statement that despite the modest gain, home sales remain “sluggish,” with a possible factor being elevated home prices, with the median existing-home price rising by 4.2 percent year over year in July to $422,600.
