Although some current homeowners are returning to the refinancing market as a result of lower mortgage rates, this is not enough to make up for the decline in demand from homebuyers.

The number of mortgage applications dropped 1.9% last week compared to the week before, according to the seasonally adjusted index from the Mortgage Bankers Association.

For loans requiring a 20% down payment and conforming loan amounts ($647,200 or less), the average contract interest rate for 30-year fixed-rate mortgages dropped to 6.41% from 6.49%, with points falling to 0.63 from 0.68 (including the origination fee). This is still more than three full percentage points more than it was a year ago even if it is 73 basis points lower than it was a month ago.

While refinancing requests for mortgages increased 5% for the week, they were still 86% fewer than during the same week last year. Very few existing borrowers still qualify for refinancing at the higher interest rates of today. Refinance applications made up 28.7% of all mortgage activity, up from 26.1% the week before.

Mortgage applications for house purchases were 40% fewer this week than they were the same week last year, a decrease of 3% for the week.

Buy activity decreased last week, while a rise in FHA and USDA loan applications somewhat offset a decline in conventional purchase applications.

In line with somewhat higher government applications and a rapidly cooling housing market, the average loan amount for homeowner applications dropped to $387,300, the lowest level since January 2021, according to Kan.

Since there hasn’t been any substantial economic news making headlines this week, mortgage rates haven’t changed significantly. With the much-awaited monthly inflation reading expected next week, the next significant change is most likely to occur.

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