Mortgage Rates Drop to 7.41% but Demand Falls Further — SkimNews
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- Mortgage Bankers Association reported total mortgage application volume dropped 5.3% week over week, with both purchase and refinance demand continuing to fall despite lower rates.
- 30-year fixed-rate mortgages with conforming loan limits saw average contract interest rates fall to 7.41% from 7.50%, the first decline in over two months, with points also decreasing to 0.75 from 0.83.
- Joel Kan, an economist at the Mortgage Bankers Association, stated that lower rates failed to revive application activity, as borrowers remain deterred by the overall high cost of financing.
- Refinance applications fell 2% week to week and were down 59% compared to the same week last year, reflecting a minimal pool of borrowers who can benefit amid rates being over a percentage point higher than a year ago.
- Purchase mortgage applications declined 7% for the week and were 18% lower than a year earlier, aligning with the National Association of Realtors’ report of a sharp drop in September pending home sales.
- Adjustable-rate mortgages (ARMs) held a steady 10.5% share of applications, as their rates remained nearly a full percentage point below 30-year fixed rates, offering a lower-cost option for qualified buyers.
Why it matters: Homebuyers and refinancers are staying on the sidelines even as rates ease slightly, because current levels remain too high to meaningfully improve affordability. With purchase demand down 18% year-over-year and refinance activity near multi-year lows, the housing market faces continued pressure despite the marginal rate relief.
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