MW 30-year mortgage rate drops to a seven-week low
By Aarthi Swaminathan
The 30-year rate fell for a third week in a row
The numbers: Mortgage rates fell for the third week in a row, boosting refinancing activity.
The 30-year mortgage rate fell to the lowest level in seven weeks.
The drop in rates caused the market composite index - a measure of mortgage-application volume - to increase last week, the Mortgage Bankers Association (MBA) said Wednesday.
On a week-over-week basis, the market index rose 1.9%, to 201.9, for the week ending May 17. A year ago, the index stood at 205.
Key details: The purchase index - which measures mortgage applications for the purchase of a home - fell 1.2% from the previous week.
The refinance index rose 7.4%. The index measuring refinances of government-backed mortgages, in particular, rose 16.1%.
The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 7.01% for the week ending May 17. That's down from 7.08% in the week before.
The rate for jumbo loans, or the 30-year mortgage for homes sold for more than $766,550, was 7.18%, down from 7.22% the week prior.
The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.77%, down from 6.86% the previous week.
The 15-year was down to 6.42%, from 6.61% from the week before.
The rate for adjustable-rate mortgages was down to 6.48%, from 6.56% the week prior.
The big picture: The housing market is seeing early signs of life as mortgage rates fall and refinancing activity picks up.
But a drop in rates doesn't necessarily mean the sector is turning a corner. While lower rates make buying a home more affordable due to lower borrowing costs, homes are still out of reach for many due to home prices that are still elevated. Some parts of the nation continue to face tight inventory, which is leading to bidding wars.
It's not clear if an improvement in housing supply will be enough to make it easier for home buyers to purchase homes in some parts of the nation, as so much pent-up demand is on the sidelines. For instance, even though new listings in San Jose, Calif., rose 47% in April, 76% of homes were sold above their final list price, according to data from real-estate brokerage Redfin $(RDFN)$.
What the MBA said: "Rates coming down from recent highs spurred some borrowers to act, with increases across both conventional and government refinance applications," Joel Kan, deputy chief economist and vice president at the MBA, said in a statement.
"Purchase activity continues to lag despite this recent decline in rates, down 11% from a year ago, as potential buyers still face limited for-sale inventory and high list prices."
-Aarthi Swaminathan
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May 22, 2024 07:00 ET (11:00 GMT)
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