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Mortgage demand falls again even as interest rates sink further


A “For Sale” sign in front of a home in Sacramento, California, on Monday, Dec. 5, 2022.David Paul Morris | Bloomberg | Getty ImagesLower mortgage rates are pulling some current homeowners back to the refinance market, but not enough to offset the drop in demand from homebuyers. Mortgage application volume fell 1.9% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.41% from 6.49%, with points decreasing to 0.63 from 0.68 (including the origination fee) for loans with a 20% down payment. That is 73 basis points lower than it was a month ago but still more than three full percentage points higher than it was a year ago.Applications to refinance a home loan rose 5% for the week but were still 86% lower than the same week one year ago. There are still precious few current borrowers who can benefit from a refinance at today’s higher interest rates. The refinance share of mortgage activity increased to 28.7% of total applications from 26.1% the previous week.Mortgage applications to purchase a home fell 3% for the week and were 40% lower than the same week one year ago.”Purchase activity slowed last week, with a drop in conventional purchase applications partially offset by an increase in FHA and USDA loan applications,” noted Joel Kan, an MBA economist in a release.The average loan size for homebuyer applications decreased to $387,300 — its lowest level since January 2021, which is consistent with slightly stronger government applications and a rapidly cooling home-price environment, according to Kan.Mortgage rates haven’t moved much this week, with no significant economic news making headlines. The next big shift will likely come next week, with the much-anticipated monthly read on inflation.

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