Mortgage rates declined last week, supporting growth in refinancing activity but having little impact on home purchase applications. Overall mortgage applications recorded a slight stabilization, rising by just 0.4%, according to the Mortgage Bankers Association.
The average interest rate for 30-year fixed-rate mortgages fell to 6.09%, marking its lowest level since September 2022, with points decreasing to 0.53 for loans with a 20% down payment.
Refinancing demand increased by 4% week-over-week and surged 150% compared to the same period last year, when rates were significantly higher. However, overall refinancing activity remains lower than last year’s levels.
Applications for home purchase mortgages declined by 5% during the week, though they were still 12% higher compared to a year earlier. Despite benefiting from lower interest rates, buyers continue to face elevated home prices and economic uncertainty, limiting the positive impact of declining rates.
Real estate brokerage firm Redfin reported that 40,000 home purchase agreements were canceled in January, representing 13.7% of all contracts — the highest share for the month since 2017. Despite the added risks, some borrowers have turned to adjustable-rate mortgages due to their lower rates compared to fixed-rate loans.
