Homebuyers sit up and take notice as mortgage rates fall


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Mortgage rates began to retreat from 2024 highs last week and homebuyers took notice, with applications for purchase mortgages picking up after five consecutive weeks of declines, according to a weekly survey of lenders by the Mortgage Bankers Association (MBA).

The MBA survey showed purchase loan applications jumped by a seasonally adjusted 11 percent from the week before, but were still down 8 percent from a year ago. Similarly, applications to refinance were up 8 percent week over week but down 2 percent from a year ago.

“The latest data on inflation was not markedly better nor worse than expected, which was enough to bring mortgage rates down a bit, with the 30-year fixed mortgage rate declining slightly last week to 7.02 percent,” MBA Chief Economist Mike Fratantoni said in a statement.

mike

Mike Fratantoni

Requests for FHA purchase loans were up by a seasonally adjusted 13.5 percent, “again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates,” Fratantoni said. “Other sources of housing data are showing increases in new listings, which is a real positive for the spring buying season given the lack of for-sale inventory.”

A lender survey by Mortgage News Daily shows rates on 30-year fixed-rate mortgages have declined five out of the last six business days, dipping below 7 percent Wednesday to the lowest level in three weeks.

The downward trend kicked off with a Feb. 29 update of the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, which showed inflation continued to decelerate in January, in line with economists’ expectations. The next day, the Institute for Supply Management’s Manufacturing PMI showed the manufacturing sector contracted in February for the 16th consecutive month.

Yields on 10-year Treasurys, a barometer for mortgage rates, eased for the third day in a row Wednesday after the latest jobs data from the Bureau of Labor Statistics showed job openings fell slightly from December to January, in line with economists’ expectations.

Mortgage rates down from peaks


Loan lock data tracked by Optimal Blue showed borrowers were locking in rates on 30-year fixed-rate mortgages Tuesday at an average rate of 6.82 percent, down 11 basis points from a 2024 peak of 6.93 percent registered on Feb. 28.

Optimal Blue data shows rates hit a 2024 low of 6.50 percent on Feb. 1, a 1.33 percentage point drop from the 2023 peak of 7.83 percent registered on Oct. 25.

Mortgage News Daily reports rates that are higher than Optimal Blue because its index is adjusted to account for points that many borrowers pay to get a lower rate. Optimal Blue uses actual rates provided to borrowers for rate locks, regardless of the points paid.

For the week ending March 1, the MBA reported average rates for the following types of loans

  • For 30-year fixed-rate conforming mortgages (loan balances of $766,550 or less), rates averaged 7.02 percent, down from 7.04 percent the week before. With points unchanged at 0.67 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also decreased, to 7.22 percent.
  • Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $766,550) averaged 7.21 percent, up from 7.20 percent the week before. With points decreasing to 0.36 from 0.57 (including the origination fee) for 80 percent LTV loans, the effective rate decreased to 7.31 percent.
  • For 30-year fixed-rate FHA mortgages, rates averaged 6.86 percent, unchanged from the week before. But with points decreasing to 0.90 from 0.99 (including the origination fee) for 80 percent LTV loans, the effective rate decreased to 7.12 percent.
  • Rates for 15-year fixed-rate mortgages averaged 6.66 percent, down from 6.70 percent the week before. With points decreasing to 0.67 from 0.68 (including the origination fee) for 80 percent LTV loans, the effective rate also decreased to 6.83 percent.
  • For 5/1 adjustable-rate mortgages (ARMs), rates averaged 6.38 percent, up from 6.33 percent the week before. With points increasing to 0.67 from 0.58 (including the origination fee) for 80 percent LTV loans, the effective rate increased to 6.62 percent.

The MBA survey found ARM loans accounted for 7.7 percent of all mortgage applications last week, and requests to refinance represented 30.2 percent of loan requests.

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