U.S. mortgage rates declined to their lowest level since February, potentially stirring a rise in demand following a drop in home purchase applications. The 30-year fixed mortgage declined by 5 basis points to 6.82% in the week ending July 19, data from the Mortgage Bankers Association (MBA) showed.
Although mortgage rates have remained below 7%, they remain almost double the rates experienced in 2021. According to one index, mortgage applications have declined by 4% to their lowest level since the end of May. MBA’s overall index of applications, which takes into account both home purchases and refinancing applications, declined by 2.2% over the past week, while the separate refinancing gauge edged 0.3% higher.
The MBA survey has emerged as a telling gauge of the mortgage rate and real estate climate of the US, drawing responses from commercial banks, mortgage bankers, and thrifts for use in its research. The survey incorporates 75% of all retail residential mortgage applications across the U.S.
Despite a drop in mortgage rates, U.S. home buyers still appear reluctant to submit applications for residential property purchases. This trend could be driven by stubbornly high home prices, which is evidenced by a decline in purchases of previously owned homes.