Mortgage Rates Drop But Housing Demand Stays Low

New housing data shows that while mortgage rates have declines, Americans are not willing to jump back into the housing market.

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The Mortgage Bankers Association released the data, which showed the purchase index rose a bit but is still much lower than the same time last year.

“The seasonally adjusted Purchase Index increased 4 percent from one week earlier,” the group said. “The unadjusted Purchase Index decreased 10 percent compared with the previous week and was 46 percent lower than the same week one year ago.”

Mortgage applications rose 2.7% from the previous week, a minor bounceback after weeks of decline.

“Mortgage rates decreased last week as signs of slower inflation pushed Treasury yields lower. The 30-year fixed rate saw the largest single-week decline since July 2022, dropping to 6.9 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Application activity, adjusted to account for the Veterans Day holiday, increased in response to the drop in rates – driven by a 4 percent rise in home purchase applications. Purchase applications increased for all loan types, and the average purchase loan dipped to its smallest amount since January 2021. Refinance activity remained depressed, down 88 percent over the year. There is very little refinance incentive with rates so much higher than last year.”

Refinance rates have plunged as well.

“The Refinance Index decreased 2 percent from the previous week and was 88 percent lower than the same week one year ago,” the group said.

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