Since February 2023, mortgage rates have reached their lowest point.

• The interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased from 6.43% to 6.29%.
• The number of mortgage applications for purchasing a home increased by 2% during the week, but was 3% lower compared to the same week last year.

Last week, mortgage rates decreased for the sixth consecutive week, yet mortgage demand remains hesitant, possibly in anticipation of a larger event.

The interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.29% from 6.43%, with points falling to 0.55 from 0.56 (including the origination fee) for loans with a 20% down payment. This is the lowest level since February 2023 and nearly a full percentage point lower than the same week one year ago, according to the Mortgage Bankers Association.

According to Joel Kan, vice president and deputy chief economist at the MBA, treasury yields have been reacting to data indicating a decrease in inflation, a slowing job market, and the expected first rate cut from the Federal Reserve in the near future.

Despite the increase in total mortgage demand, it only rose by 1.4% for the week, according to the MBA's seasonally adjusted index, after taking into account the Labor Day holiday.

Although refinance applications only rose by 1% from the previous week, they were 106% higher than the same period last year. Despite this significant increase, refinancing remains historically low due to the low numbers from the previous year.

Although some borrowers still have sub-5 percent rates, there is still limited refinance potential. However, it is a positive development that homeowners can benefit from a refinance as rates continue to move lower, according to Kan.

Those who refinanced their homes were likely to have purchased them within the past two years, during a time when interest rates had risen significantly from their previous lows.

The number of mortgage applications for purchasing a home increased by 2% during the week, but was 3% lower compared to the same week last year.

Kan stated that although there was a decline in rates, affordability challenges and restricted stock may still impede buyers' decisions.

This week, mortgage rates decreased further, as reported by Mortgage News Daily. However, the consumer price index, which measures inflation, will be released on Wednesday and could significantly affect the direction of rates.

Matthew Graham, chief operating officer of Mortgage News Daily, wrote that if it weren't for the fact that the CPI report is one of the only big ticket reports that comes out during the blackout period leading up to a Fed rate cut where the size of the cut is uncertain, we would confidently say that CPI is almost completely inconsequential. However, due to all the "stuff" surrounding the report, we cannot rule out a volatile response to a big beat/miss.

The headline on an earlier version incorrectly stated the year when it reported that mortgage rates hit their lowest level since February 2023.