Last week, homeowners looking to refinance received some good news as mortgage rates slightly decreased following the Federal Reserve Chairman’s indication of a potential end to interest rate hikes. Although not a significant drop, the dip was sufficient to see a boost in demand for refinancing.
The Mortgage Bankers Association’s weekly survey reported that the average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) dipped to 6.48% from 6.50% from the previous week, and was substantially higher than the same week last year, which was 5.53%. Refinance applications increased by 10% in comparison to the previous week. This demand, however, is still 44% lower than last year’s.
Despite the decrease in rates, mortgage applications for home purchases only increased by 5% last week, with a year-over-year decrease of 32%. High home prices have not been offset by the slight drop in rates. While prices cooled in the summer, they’re starting to heat up again this spring due to lack of supply and strong demand.
Though mortgage rates have risen sharply this week, with investors optimistic about easing regional banking crises, everything could change with the release of the consumer price index report on Wednesday. Any significant variance from expectations could decisively impact bond yields and, consequently, mortgage rates.
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