Mortgage rates dip slightly as application volume continues to fall

The average contract rate for a 30-year fixed-rate mortgage on loans up to $832,750 slipped to 7.41% last week, down from 7.50% the prior week, according to the Mortgage Bankers Association. Despite the rate decline, the association’s seasonally adjusted index showed total mortgage applications falling 5.3% week over week.

"Mortgage rates decreased for the first time in over two months," said Joel Kan, an economist with the MBA, adding that the lower rates did not revive application activity and that both purchase and refinance requests continued to decline.

Refinance applications slipped 2% from the previous week, still 59% lower than a year earlier, reflecting the limited pool of borrowers who can benefit from refinancing when rates are more than a percentage point above last year’s levels. Purchase-loan applications dropped 7% for the week and were 18% lower than the same period a year ago, indicating that buyers are responding more to the overall higher rate environment than to short-term movements.

The share of borrowers choosing adjustable-rate mortgages held steady at 10.5%, as those loans offered rates nearly a full percentage point below the 30-year fixed rate, providing a lower-cost option for qualified purchasers.

Mortgage News Daily reported that rates have been relatively unchanged this week after a volatile period driven by multiple inflation reports, and noted that recent movements appear to track oil prices.

"But we'd caution against placing too much emphasis on the oil price correlation," wrote Matthew Graham, chief operating officer at Mortgage News Daily, describing the relationship as unreliable over the past month.