WASHINGTON–Following a huge 58% weekly surge in refinance demand two weeks, mortgage demand stalled again last week, even though interest rates fell further, according to new data.
The Mortgage Bankers Association reported that total application volume rose 0.6% last week from the previous week, which marks an increase, but it’s nowhere close to the application volume many lenders saw after a slow but ongoing decline in mortgage rates.
According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased to 6.34% from 6.39%, with points increasing to 0.57 from 0.54, including the origination fee, for loans with a 20% down payment.
Lowest Level Since 2024
That is the lowest level since September 2024, the MBA said.
The organization noted, however, that that figure is a weekly average, and last week was “particularly volatile.” Early in the week, before the Federal Reserve cut its rate, mortgage rates, which follow loosely the yield on the 10-year Treasury, fell to the lowest level in three years. In the days after the Fed cut, however, rates rose about a quarter of a percentage point, the MBA said.
Refinance demand, which had spiked dramatically higher the week before, climbed just 1% for the week but was 42% higher than the same week one year ago.
Rates Move Up, But…
“Interest rates generally have moved up following the [Federal Open Market Committee] meeting last week but remain in a range that should continue to lead to increased refinance activity,” Mike Fratantoni, senior vice president and chief economist at the MBA, said in a statement. “Refinance volume increased further last week and is now 80% higher than four weeks ago, accounting for more than 60% of all application activity. The refinance boost last week was from government applications, with VA refinance volume up almost 15%.”
Mortgage applications to purchase a home were essentially flat, up just 0.3% for the week and up 18% from the same week one year ago, the MBA data also show.
“While homebuyer demand typically tends to decrease during the fall, purchase application activity remains relatively strong right now,” Fratantoni added.
After a similarly huge surge in demand for adjustable-rate mortgages, demand for those loans also declined last week.
