Even a modest decline in mortgage rates was enough to coax many prospective homebuyers off the sidelines last week, according to data released Wednesday by the Mortgage Bankers Association (MBA).
Mortgage application volume increased 3.1% on a seasonally adjusted basis for the week ending Aug. 1, the MBA reported. The association’s refinance index was up 5% week over week, while its seasonally adjusted purchase index rose 2%.
Joel Kan, MBA’s vice president and deputy chief economist, noted that mortgage rates followed the lead of Treasury yields, which fell due to increased bond demand as investors dumped equities following data releases showing a weakening U.S. economy.
“Borrowers sought to take advantage of these lower rates, as both purchase and refinance applications increased over the week,” Kan stated in a press release. “Purchase activity continued to lead 2024’s pace, as increasing for-sale inventory of homes has been supporting homebuying. But on the other hand, recent weakness in the economic environment has deterred some prospective homebuyers.”
Despite consumer concerns about the current economic climate, Kan observed that refinance applications accelerated to their strongest pace in four weeks, with refinances representing a 41.5% share of total applications — the highest level since April.
The adjustable-rate mortgage (ARM) share increased to 8.5% from 8.3% the week prior. The Federal Housing Administration share fell to 18.5% from 18.8% the previous week, the Veterans Affairs share rose to 13.3% from 12.2%, and the U.S. Department of Agriculture share declined slightly to a 0.5% share compared to 0.6% for the week ending July 25.
The MBA reported the average interest rate for a 30-year fixed-rate mortgage with a conforming loan balance of $806,500 or less fell six basis points to 6.77% last week. The 30-year rate for jumbo loan balances over that dollar threshold dropped nine basis points to 6.65%. The 15-year fixed rate averaged 6.03% last week compared to 6.12% the week before, per the MBA.
Freddie Mac, whose most recent weekly survey period ended July 31, reported respective 30-year and 15-year rates of 6.72% and 5.85%.
