Mortgage rates plunge to lowest level since February 2023

MW Mortgage rates plunge to lowest level since February 2023

By Aarthi Swaminathan

Home-buying activity is slowly inching up while refinances are up 106% from a year ago, industry group says

The numbers: Applications for mortgages inched up as mortgage rates fell for the sixth week in a row.

The 30-year fell to the lowest level since February 2023 ahead of a highly anticipated rate cut by the Federal Reserve next week.

The drop in rates pushed the market composite index - a measure of mortgage application volume - up slightly in the past week, according to the Mortgage Bankers Association on Wednesday.

The market index rose 1.4% to 233.7 for the week ending Sept. 6 from a week prior. A year ago, the index stood at 182.2.

Key details: The purchase index - which measures mortgage applications for the purchase of a home - rose 1.8% from a week before.

The refinance index rose by 0.9%.

The average contract rate for a 30-year mortgage for homes sold for $766,550 or less was 6.29% for the week ending Sept. 6. That's down from 6.43% the previous week.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 6.56%, down from 6.73% a week before.

The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.24%, down from 6.3% a week prior.

The 15-year was down to 5.71% from 5.98% from the previous week.

The rate for adjustable-rate mortgages was down to 5.85% from 5.98%.

The big picture: Even though rates are at a 19-month low, home-buying activity has barely picked up as people hold back. That's potentially due to expectations of rates falling even further, or due to uncertainty over the presidential elections, as MarketWatch reported previously.

A record share of respondents in a recent Fannie Mae (FNMA) survey expect rates to fall over the next 12 months.

What the MBA said: "With rates almost a full percentage point lower than a year ago, refinance applications continue to run much higher than last year's pace. However, there is still somewhat limited refinance potential as many borrowers still have sub-5% rates," Joel Kan, vice president and deputy chief economist at the MBA, said in a statement.

While "purchase applications increased over the week and are edging closer to last year's levels," he said, "affordability challenges and other factors such as limited inventory might still be hindering purchase decisions."

-Aarthi Swaminathan

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September 11, 2024 07:00 ET (11:00 GMT)

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