The average 30-year fixed mortgage rate today: 6.11%
That ties the 52-week low
Spread: 247 bps pic.twitter.com/U8AnqjOcJp
— Lance Lambert (@NewsLambert) September 17, 2024
Mortgage demand surged last week as interest rates fell to their lowest levels in two years, according to the Mortgage Bankers Association’s (MBA) seasonally adjusted index. The total mortgage application volume rose 14.2% compared with the previous week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $766,550 or less decreased to 6.15% from 6.29%, with points increasing to 0.56 from 0.55, including the origination fee, for loans with a 20% down payment.
#NEW Bank of America's mortgage-backed securities team forecasts mortgage rates of 5.75%-6.0% by year end
"which implies the bulk of the [2024] decline has
already occurred"— Lance Lambert (@NewsLambert) September 17, 2024
This is the lowest rate since September 2022 and 116 basis points lower than it was the same week one year ago. Joel Kan, an economist with the MBA, said “Application activity was up significantly last week, as market expectations of a rate cut from the Fed pulled mortgage rates lower.”
The Fed is poised to cut rates, but don't expect the move to send mortgage rates plummeting. The mortgage market has already incorporated the Fed's widely anticipated cut into the rates borrowers are paying for home loans today. More from @bio561: https://t.co/fYNJVmm8LM
— Bankrate (@Bankrate) September 16, 2024
Applications to refinance a home loan jumped 24% from the previous week and were 127% higher than the same week one year ago. Most of these applicants likely purchased their homes in the past two years, when rates rose sharply from the record lows seen in the first two years of the COVID-19 pandemic.
2024
Purchase apps as rates were rising earlier in the year
14 negative prints,
2 positive,
2 flat prints
Since June as Rates have been falling
9 positive prints
5 negative
The year was very negative, not on the volume curve, but the weekly printshttps://t.co/sP3q1nfOvX— Logan Mohtashami (@LoganMohtashami) September 16, 2024
Despite the increase in volume, the base level remains low, as the majority of borrowers have loans with interest rates well below 5%. Both conventional and government activity climbed to the fastest pace of refinancing since 2022.
Mortgage demand climbs on falling rates
Applications for a mortgage to purchase a home increased 5% for the week but were still 0.4% lower than the same week one year ago. Kan added, “It is notable that conventional purchase applications increased to a pace ahead of last year, which also drove overall purchase applications very close to year-ago levels. Homebuyers are seeing improving affordability conditions, sparked by lower rates and slower home-price growth.”
The Federal Reserve is expected to make its first interest rate cut in four years on Wednesday.
Although mortgage rates do not follow the Fed’s actions exactly, they are influenced by policy decisions. The direction of mortgage rates will depend on Fed Chairman Jerome Powell’s remarks following the decision. Matthew Graham, chief operating officer at Mortgage News Daily, noted that “lower mortgage rates are not only not remotely guaranteed by [the] Fed rate cut.
They’re actually already baked in. The directionality depends on the dot plot and Powell’s comments in the press conference. Things could go either way and the volatility could be significant.”
As the situation develops, potential homebuyers and those looking to refinance should stay informed about market expectations and Fed announcements to make the most of the favorable interest rates.
