Last week, US mortgage rates fell to the lowest level since May 2023, leading to a surge in demand for mortgage loans for homebuyers and existing homeowners. #2024 Market Outlook for the Second Half of the Year#

According to the seasonal adjustment index from the Mortgage Bankers Association (MBA), the total number of mortgage applications increased by 6.9% compared to the previous week, reaching the highest level since January of this year.

The average contract interest rate for 30-year fixed-rate mortgages (loans that meet the loan balance standard of $766,550 or less) decreased from 6.82% to 6.55%, and the points with original fees decreased from 0.62 to 0.58 (based on a 20% down payment).

Joel Kan, MBA's deputy vice president and deputy chief economist, said in a release: "Last week, mortgage rates fell across the board due to the Fed's dovish comments and weak employment reports, which exacerbated concerns about the economy slowing down faster than expected."

Applications for mortgage refinancing, which are most sensitive to weekly rate changes, skyrocketed by 16% this week, 59% higher than the same week last year. Although the increase was large, it was still based on a very small base. Currently, the interest rates for most borrowers are below 5%. Less than 1 million borrowers can benefit from refinancing and lower their current interest rates by at least 75 basis points.

Applications for home purchase loans only increased by 1%, but still 11% lower than the same week last year.

Kan added: "Although rates have declined slightly, home buying activity has only been slightly higher, with the increase in traditional home purchase applications offset by the decrease in government home purchase applications. Inventories for sale in some areas began to gradually increase, and given the possibility of lower rates in the future, homebuyers may be waiting for the right time to enter the market."

As the stock market plummeted on Monday, mortgage rates further declined this week. However, after the release of some more positive economic data on Tuesday, rates sharply rose again.

Matthew Graham, Chief Operating Officer of Mortgage News Daily, wrote: "When the bond market forces rates to quickly reach extreme levels, this is often the case. For example, many of the largest daily declines in mortgage rates followed the rapid movement of long-term highs."