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Mortgage Demand Continues to Slip, Despite Falling Rates
December 22, 2023
Prospective homebuyers still have little appetite to buy, even as mortgage rates continue to retreat from recent highs.
The average rate for a 30-year fixed-rate mortgage for conforming loan balances (meaning $726,200 or less) fell from 7.07% last week to 6.83% this week, putting the rate at its lowest level since June.
Even with the recent decline, mortgage rates are still significantly higher than before the start of the pandemic, and still high enough to keep most borrowers on the sidelines.
Applications to refinance loans fell 2% for the week, after jumping 19% amid the downturn in mortgage rates last week, according to the Mortgage Bankers Association (MBA). Refinance demand was 18% higher than during the same week last year, however. Applications for mortgages to purchase a home were down 1% for the week and were 18% lower than during the same week a year prior.
Despite the drop in demand at the end of the year, the MBA has high hopes for the coming year. A statement from the organization noted that the Fed’s recent signals regarding interest rate cuts next year “should support further declines in mortgage rates, just in time for the spring housing market.”
The MBA also said that it expects mortgage origination volume to increase by 22% in 2024, climbing to $2 trillion total, with demand for purchase mortgages climbing 14% while refinances jump 56%.
