Interest rates declined following turmoil in the banking sector, helping lift demand for mortgages.
Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.45% from 6.48%, with points decreasing to 0.62 from 0.66 for loans with a 20% down payment. The rate was 4.8% the same week one year ago.
Applications to refinance a home loan increased 5% for the week but were still 61% lower year over year. The vast majority of homeowners today have mortgages with interest rates far below today's rate, leaving them little incentive to refinance. Those who want to take out equity are largely opting for second loans, rather than give up the rates they have in a cash-out refinance.
Mortgage applications to purchase a home increased 2% for the week but were 35% lower than the same week one year ago. Buyers are coming back into the market for the traditionally busy spring season but are finding very little available for sale. "Home-price growth has slowed markedly in many parts of the country, which has helped to improve buyers' purchasing power," said Joel Kan, an MBA economist in the release. "While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications."
Mortgage rates, however, moved more than 20 basis points higher to start this week, according to a separate survey from Mortgage News Daily. With no more bank failures in the news this week, and no major economic data to influence investors, rates could return to the higher trajectory they were on before the bank issues hit.
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