US mortgage rates have eased to their lowest levels since early February, but the decline in home-purchase applications indicates that even lower borrowing costs may be needed to boost demand.
According to the Mortgage Bankers Association (MBA), the contract rate on a 30-year fixed mortgage fell by 5 basis points to 6.82% for the week ending July 19. Despite this decrease, the index tracking mortgage applications for home purchases dropped by 4%, reaching its lowest point since late May.
Although current mortgage rates are below 7%, they remain roughly double the levels seen at the end of 2021. Coupled with high home prices, these rates have pushed many potential buyers out of the market, as reflected by the declining sales of previously owned homes.
The National Association of Realtors reported that its affordability index for homebuyers fell for the fourth consecutive month in May, hitting one of its lowest points since the index began in 1989.
The MBA’s overall index of mortgage applications, which includes both home purchases and refinancing, decreased by 2.2% last week. Meanwhile, the refinancing component saw a slight increase of 0.3%.
The MBA survey, which has been conducted weekly since 1990, collects data from mortgage bankers, commercial banks, and thrifts, covering over 75% of all retail residential mortgage applications in the US.
