A prospective home buyer is shown a home by a real estate agent in Coral Gables, Florida.
Joe Raedle | Getty Images
Demand for mortgages fell for a fourth week in a row, according to data released Wednesday, even as interest rates have fallen from recent highs.
Total volume was down 1[ads1].8% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Applications for loans to buy a home fell 1% for the week, but were 18% lower than the same week a year ago. More offers are entering the housing market as competition cools among buyers. But prices and rates remain high, and inflation erodes consumer confidence.
The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) fell to 5.74% from 5.82%, with points to 0.61 from 0.65 (including the origination fee) for loans with 20% down. payment.
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“Increased economic uncertainty and widespread affordability challenges are discouraging households from entering the market, leading to declining purchasing activity that is near the lows last seen at the start of the pandemic,” said Joel Kan, economist at the Mortgage Bankers Association.
There could be “a potential silver lining” for the market, he added, as stabilizing mortgage rates and rising inventory “may bring some buyers back into the market in the second half of the year.”
Applications to refinance a mortgage fell another 4% for the week and were 83% lower than the same week a year ago. The average interest rate on the 30-year fixed mortgage was 3.01% a year ago. Most borrowers have already refinanced at much lower interest rates than today. The refinancing share of mortgage activity fell to 30.7% of total applications from 31.4% the previous week.
All eyes and ears are now on the Federal Reserve, which is widely expected to raise its benchmark lending rate on Wednesday at its latest meeting of the Federal Open Market Committee.
Although mortgage rates do not track the federal funds rate, they will respond to any comments from Fed Chairman Jerome Powell after the meeting.