The numbers: U.S. mortgage applications dipped, despite rates falling to the lowest level in five months.
The 30-year rate dropped 24 basis points in the last week to the lowest level since June 2023.
Even though rates moved lower, that failed to boost home-buying and refinancing demand. The overall market composite index — a measure of mortgage application volume — decreased in the latest week, according to the Mortgage Bankers Association (MBA) said on Wednesday.
The market index fell 1.5% to 191.6 for the week ending December 15 from a week earlier. A year ago, the index stood at 212.5.
Key details: Home-buying and refinancing activity fell, despite rates falling across the board.
Buyer demand decreased as buyers considered waiting for rates to fall further before buying a home. The purchase index — which measures mortgage applications for the purchase of a home — fell 0.6% from last week.
Refinancing activity also dropped, also potentially as homeowners hold off. The refinance index fell by 1.8%, with the exception of Veterans Affairs refinance applications surging by 18% in the latest week, the MBA said.
The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.83% for the week ending December 15. That’s down from 7.07% from the week before.
The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 7.12%, down from 7.22% the previous week.
The average rate for a 30-year mortgage backed by the Federal Housing Administration was down to 6.65% from 6.84%.
The 15-year fell to 6.33% from 6.47% from the previous week.
The rate for adjustable-rate mortgages fell to 6.47% from last week’s 6.58%.
The big picture: A drop in mortgage rates will come as much-needed relief to many aspiring homeowners at a time when affordability has dropped to multi-decade lows.
The drop in applications this week comes after a big jump the previous week, suggesting that house hunters and homeowners with high mortgage rates may be waiting for rates to fall further before acting.
What the MBA said: “At least as of last week, borrowers’ response to this rate move was rather tepid,” said Mike Fratantoni, chief economist and senior vice president at the MBA, said in a statement.
Market reaction: The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was below 3.9% in early morning trading Wednesday.
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