Last week was an exciting time in the world of mortgages! Can you believe it? Mortgage rates pulled back for the second week in a row, and boy, did that get homeowners and potential buyers buzzing with excitement. People wasted no time and immediately reached out to their lenders to seize this opportunity.
According to the Mortgage Bankers Association’s trusty index, mortgage application volume shot up by a solid 7.2% compared to the previous week. That’s quite a jump, isn’t it?

Here’s the scoop on the rates: for those looking at 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less, the average contract interest rate dipped down from 6.81% to a more attractive 6.77% in the previous week. And guess what? The points associated with these loans also dropped slightly from 0.66 to 0.65 (including the origination fee) for those folks who managed to put down a 20% down payment.

But wait, there’s more! Refinance applications saw a decent increase of 6% for the week. However, when we compare it to the same week last year, we notice a substantial 41% decrease. It’s fascinating to see how things have changed, isn’t it? Even though rates have eased up a bit, they’re still sitting a whole percentage point higher than last year. In fact, they’re more than double what they were during those first two wild years of the Covid pandemic when everyone was jumping on the refinance bandwagon. It’s no wonder many borrowers nowadays are quite content with their lower rates and don’t want to risk losing them, not even for a cash-out refinance.

On the flip side, mortgage applications for purchasing a new home experienced an impressive 8% increase for the week. However, compared to the same week last year, they’re down by a significant 27%. It seems that the combination of higher rates and limited inventory is putting a damper on the homebuying frenzy in many markets. It’s a tough gig out there for buyers, I tell you!

Quoting the wise Joel Kan, an economist at the MBA, “Rates that remain more than a percentage point higher than a year ago, coupled with limited inventory for sale, continue to hinder homebuying activity in numerous markets.” But hey, here’s an interesting tidbit: the average loan size for purchase loans actually decreased for the third consecutive week. That’s a sign that we’re witnessing a surge in first-time homebuyers entering the market. Exciting times ahead!

As we fast-forward to the present week, mortgage rates seem to have settled down a bit. However, brace yourself, my friends! There could be some major shifts on the horizon. Why, you ask? Well, this Wednesday afternoon, the Federal Reserve is set to announce the results of its latest policy meeting along with updated rate forecasts. What does this mean for mortgage rates, you may wonder? Some folks believe that the Fed’s forecasts could signal one or two rate hikes in 2023. Now, I must emphasize that the Fed Funds Rate doesn’t have a direct impact on mortgage rates, but any movement from the Fed could put some serious upward pressure on interest rates of all kinds and shapes.

So, let’s keep our eyes peeled and see what the future holds for mortgage rates. Until then, my fellow mortgage enthusiasts, stay curious, stay informed, and keep dreaming of that perfect home sweet home!