In a surprising turn, mortgage rates experienced their most significant one-week dive in over a year, leading to an unexpected spike in mortgage applications – up 2.5% from the prior week. This news comes from the Mortgage Bankers Association’s latest data.
Highlights include the average interest rate for 30-year fixed-rate mortgages on standard loan amounts (up to $726,200) tumbling down to 7.61% from 7.86%. Points also dipped to 0.69 from 0.73 for those who can afford a 20% down payment.
Mortgage rates plunge and demand finally inches back https://t.co/vLex3z2hN8 https://t.co/vLex3z2hN8
— CNBC (@CNBC) November 8, 2023
Insights from Joel Kan, the MBA’s vice president, suggest this rate reduction was influenced by a series of economic factors, including a softer stance from the Federal Reserve and signs of a cooling job market.
Refinance applications nudged up by 2%, but with rates similar to last year’s, the refinance frenzy has cooled. Most homeowners already locked in lower rates during the historic lows two years ago. Meanwhile, applications for new home purchases increased by 3%, though they’re still 20% down from last year’s figures, unable to combat the persistent rise in home prices and the shortage of available homes.
Despite the beginning of the week seeing a slight increase in mortgage rates, the economic calendar is less packed, suggesting fewer fluctuations ahead. Last week’s rate reduction was a confluence of the Fed’s decision to keep rates steady and a jobs report that fell short of expectations, creating ideal conditions for rates to fall.
