Mortgage Rates Dropped Last Week But Prices are Still High
Last week, mortgage rates dropped, making house owners more anxious. Following the drop, homeowners are considering their savings as a refinancing solution.
Mortgage Bankers Association data shows that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less dropped to 7.07% from 7.17%, with points for loans with a 20% down payment dropping to 0.59 from 0.60. The rates have never plunged this low since July.
The Mortgage Bankers Association’s seasonally adjusted index shows that applications to refinance house loans rose 19% last week compared to the week before. Demand for refinancing increased by 27% from the previous week.
Despite a 4% weekly increase, the number of mortgage applications for home purchases was still 18% less than it was the same week last year. Even if mortgage rates are currently lower for buyers, there is still fierce competition in a market with high prices and limited available properties.
Since the first economic data of the week has been consistent with forecasts, mortgage rates have not changed significantly. Depending on the results of the most recent Federal Reserve meeting and Chair Jerome Powell’s remarks, that could change on Wednesday. The markets anticipate a rate reduction from the Fed but expect it to maintain its current level.
New House prices are high, but the housing supply is dwindling as fewer properties are listed on the market. New house buyers want mortgage loans, but at a very low rate.
This can be a sign of a slowing economy, and the Federal Reserve is expected to make some moves.
