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Residential houses in Discovery Bay, California, US, on Thursday, November 7, 2024. Mortgage rates in the United States have increased to the highest level since July.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates last week moved higher for the fourth week in a row. That caused the already very weak mortgage demand to drop even more. The total volume of mortgage applications fell by 3.7% compared to the previous week, according to the seasonal index of the Mortgage Bankers Association. An additional adjustment was made for the New Year holiday.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.99% from 6.97%, with points decreasing to 0.68 from 0.72 (including the rate of origin) for loans with a 20% down. payment It is the highest rate since July 2024.
Applications to refinance a home loan increased 2% from the previous week, but were 6% lower than the same week a year ago. Rates are now 18 basis points higher than they were a year ago. As for the weekly earnings, the volume in refinancing is so low now, that the percentages are skewing greater than normal.
Applications for a mortgage to buy a house fell by 7% for the week and were 15% lower than the same week a year ago. There is a much higher supply of homes for sale now than there was last January, but higher taxes and higher home prices are clearly keeping buyers on the sidelines.
“Purchase applications declined for both conventional and government loans and fell to the slowest weekly pace since February 2024,” said Joel Kan, vice president and deputy economist at the MBA. “Refinance applications increased despite higher rates, but the increase was compared to recent lows and was entirely driven by an increase in VA refinances, which continue to show weekly swings.”
Mortgage rates were higher to start this week, according to a separate survey by Mortgage News Daily, which had the 30-year fixed average at 7.14% on Tuesday. Economic data was the driving factor.
“The inflation component of ISM Services was one of the worst offenders, but the higher job opening did not help. The spike in yields was instantaneous, but quite well contained,” said Matthew Graham, head of the operation of MND.
More economic data will come on Wednesday with the release of the minutes of the Federal Reserve meeting and on Friday with the important monthly employment report. Those who keep rates on an upward trajectory or, perhaps, change the trend for the new year.
