Mortgage rates increase slightly, causing red-hot refinance demand to decrease.

• The interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 6.14% from 6.13%.
• The number of applications to refinance a home loan decreased by 3% this week, but was still an impressive 186% higher compared to the same week last year.
• The number of mortgage applications to buy a house increased by 1% in a week and was 9% greater than the corresponding week last year.

Last week, mortgage rates increased slightly, which cooled down the refinance market. As a result, total mortgage application volume decreased by 1.3%, according to the Mortgage Bankers Association's seasonally adjusted index.

The interest rate for 30-year fixed-rate mortgages with conforming loan balances increased by 139 basis points from the same week one year ago, with points rising to 0.61 from 0.57 (including the origination fee) for loans with a 20% down payment.

Despite a decline in inflation, last week's data revealed that the economy is still expanding at a steady rate. As a result, mortgage rates increased slightly, according to Mike Fratantoni, senior vice president and chief economist at the MBA, in a statement.

Although applications to refinance a home loan decreased by 3% this week, they were still 186% higher than the same week last year. Most borrowers currently have mortgages with rates below 5%, but those who bought a home recently may be able to take advantage of today's lower rates through a refinance.

The percentage of mortgage applications for purchasing homes increased by 1% during the week and was 9% higher than the same week a year ago. Despite this, the real estate market is showing signs of warming up, with Redfin reporting an increase in home tours in recent weeks. However, some buyers may be waiting for interest rates to decrease further in the near future.

Fratantoni stated that the inventory of both new and existing homes has been increasing in 2024, providing potential buyers with properties to choose from and lower mortgage rates, resulting in improved affordability.

This week, mortgage rates decreased slightly as bond yields decreased following the escalation of the Middle East conflict. The next significant change in interest rates may occur on Friday with the release of the monthly employment report.