Despite a decline in mortgage rates in the past week, one area of the mortgage market isn’t seeing relief — the refinance market.
The Refinance Index decreased 2% from the previous week, according to the weekly survey from the Mortgage Banker’s Association.
The refinance share of mortgage activity decreased to 27.6% of total applications from 28.1% the previous week.
“Refinance activity remained depressed, down 88% over the year,” said Joel Kan, MBA’s vice president and deputy chief economist. “There is very little refinance incentive with rates so much higher than last year.”
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Mortgage rates declined as Treasury yields moved lower following signs of easing inflation.
The average contract interest rate for 30-year fixed mortgages decreased to 6.90% from 7.14%.
With the reduction, there were some bright spots in the latest data.
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Overall demand for mortgage applications increased 2.7% from the previous week.
“Application activity, adjusted to account for the Veterans Day holiday, increased in response to the drop in rates – driven by a 4% rise in home purchase applications,” said Kan. “Purchase applications increased for all loan types, and the average purchase loan dipped to its smallest amount since January 2021”.
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The survey covers over 75% of all US retail residential mortgage applications and has been conducted weekly since 1990.