The figures: For the second week in a row, mortgage rates dropped, which led to a rise in refinancing activity.
The 30-year mortgage rate dropped to its lowest point since early April, a decrease of 10 basis points.
The Mortgage Bankers Association (MBA) said on Wednesday that the decline resulted in an increase in the market composite index, which is a gauge of the volume of mortgage applications, over the previous week.
For the week ending May 10, the market index increased by 0.5% from the previous week to 198.1. When the index was at 214.9 a year ago.
Important information: Mortgage applications for home purchases are measured by the purchase index, which decreased 1.7% from the previous week.
Refinance index increased by 4.7%. In particular, the government-backed mortgage refinancing index increased by 13.4%.
The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 7.08% for the week ending May 10. That’s down from 7.18% from the week before.
The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 7.22%, down from 7.31% the previous week.
The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.86%, down from 6.92% a week prior.
The 15-year was up to 6.61%, from 6.6% the previous week.
The rate for adjustable-rate mortgages was down to 6.56%, from 6.6%.
The big picture: The housing market is feeling uncertain as rates bounce around while it waits for further news about the U.S. economy and whether the Federal Reserve will cut interest rates.
Home–buying sentiment is at a record low due to high mortgage rates, and low inventory is pushing home prices up.
Lower rates will help ease the lock-in effect and improve affordability, but for that to happen, the Fed needs to signal a rate cut for mortgage rates to come down. The next big economic indicator that the market is watching is on Wednesday, when the government releases the Consumer Price Index.
What the MBA said: “The decline in rates led to a small boost to refinance applications, including another strong week for [Veterans Affairs] refinances,” Joel Kan, deputy chief economist and vice president at the MBA, said in a statement.
“While the downward move in rates benefits prospective homebuyers, mortgage rates are still much higher than they were a year ago, while for-sale inventory remains tight,” he added.
