The numbers: Demand for mortgages rose this week as mortgage rates fell to their lowest level since July.
Interest rates have fallen 10 basis points in the past week and the 30-year rate is 54 basis points lower than a month ago.
Lower interest rates boosted purchasing and refinancing demand. The overall composite market index – a measure of the number of mortgage applications – rose last week, the Mortgage Bankers Association (MBA) said on Wednesday.
The market index rose 7.4% in the week ending December 8 from a week earlier to 194.5. A year ago the index stood at 210.7.
Key details: Home buying and refinancing activity increased due to lower interest rates.
The purchase index – which measures mortgage applications for the purchase of a home – rose 3.5% compared to last week.
Refinancing activity, on the other hand, increased sharply. The refinance index rose 19.4%, with a “particularly notable increase for FHA and VA refinance applications,” according to the MBA.
The average contract rate for the 30-year mortgage for homes selling for $726,200 or less was 7.07% for the week ending December 8. That is a decrease from the 7.17% of the previous week.
The rate for jumbo loans, or the 30-year mortgage for homes sold for more than $726,200, was 7.22%, up from 7.35% the week before.
The average rate for a 30-year mortgage backed by the Federal Housing Administration fell from 6.98% to 6.84%.
The 15-year yield fell from 6.8% a week earlier to 6.67%.
The rate for variable rate mortgages fell to 6.47% from 6.58% last week.
The big picture: Homeowners, even more than homebuyers, are taking advantage of the drop in interest rates to refinance their mortgages.
But most economists expect interest rates to fall further to the 6% mark by the end of next year, which could stimulate home buying.
Because the majority of homeowners are on rates well below that, it may take a while for sales activity to pick up again as inventory may remain low.
What the MBA said“Mortgage rates fell last week as incoming data points to a slowing economy and supports an effort by the Federal Reserve to cut rates next year,” said Mike Fratantoni, chief economist and senior vice president at the MBA, in a statement. declaration .
“Borrowers who had seen interest rates near 8 percent earlier this fall are now seeing some lenders quoting interest rates below 7 percent,” he added.
Market response: The yield on the 10-year Treasury bond BX:TMUBMUSD10Y was below 4.2% in early morning trading on Wednesday.