Mortgage rates have declined for six straight weeks, pushing loan application volume up 1.4% during the week ending Sept. 6, according to the Mortgage Bankers Association (MBA).
The MBA’s survey — which covers 75% of all retail residential mortgage applications in the U.S. — found that the seasonally adjusted refinance index increased 1% from the previous week and was 106% higher than the same week a year ago. The seasonally adjusted purchase index increased 2% from a week earlier.
“Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate decreasing to 6.29%, the lowest rate since February 2023,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
“Treasury yields have been responding to data showing a picture of cooling inflation, a slowing job market and the anticipated first rate cut from the Federal Reserve later this month. With rates almost a full percentage point lower than a year ago, refinance applications continue to run much higher than last year’s pace.”
But the refi market isn’t expected to get much bigger as 76.1% of homeowners have a mortgage with a rate below 5%, according to a recent Redfin analysis.
“There is still somewhat limited refinance potential as many borrowers still have sub-5% rates. It is a positive development that there are homeowners who can benefit from a refinance as rates continue to move lower,” Kan said.
The average 30-year fixed-rate conforming mortgage dropped to 6.45% on Wednesday, down from 6.58% a week ago, according to HousingWire’s Mortgage Rates Center.
The MBA’s survey showed that the average contract interest rate for 30-year fixed-rate conforming loans (balances of $766,550 or less) decreased to 6.29% last week, down 14 basis points (bps) from the previous week. The average rate for jumbo loans (balances above $766,550) fell 17 bps to 6.56%.
Inflation reached a three-year low of 2.5% in August, paving the way for the Fed to cut interest rates for the first time since early 2020.
The CME Group‘s FedWatch tool on Wednesday showed that interest rate traders are heavily leaning toward the Fed making a smaller cut, with 87% predicting a 25-bps decrease at next week’s Federal Open Market Committee (FOMC) meeting.
The refi share of mortgage activity was 46.7% last week, up marginally from 46.4% during the previous week.
The Federal Housing Administration (FHA) share of total applications rose slightly to 14.7% from during the period. The U.S. Department of Veterans Affairs (VA) share decreased to 16.4% and the U.S. Department of Agriculture (USDA) share remained unchanged at 0.4%.
