WASHINGTON–Mortgage interest rates have now hit their lowest level in two months, but demand for mortgages has not risen, with total mortgage application volume falling 1.2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.88% from 6.93%, with points dropping to 0.61 from 0.66 (including the origination fee) for loans with a 20% down payment.

“Treasury yields moved lower on softer consumer spending data as consumers are feeling somewhat less upbeat about the economy and job market,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “This pushed mortgage rates lower, with the 30-year fixed rate decreasing to 6.88%, the lowest rate since mid-December.”

The Findings

According to the MBA data:

• Refinancing apps, which had been surging through much of January and early February, fell 4% for the week but were 45% higher than the same week one year ago. 
• Applications for a mortgage to purchase a home were flat for the week and 3% higher than the same week one year ago. 
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.88% from 6.93%.