The latest trends in the mortgage market indicate a pause in the fluctuations of mortgage rates. Despite ongoing challenges in the spring housing market, homebuyers are showing signs of renewed interest.

Current Mortgage Rates

Data from the Mortgage Bankers Association shows that the average interest rate for a 30-year fixed mortgage, applicable to conforming loan balances of $806,500 or less, decreased marginally from 6.72% to 6.71%. Points associated with this rate also dipped slightly to 0.60 from 0.64, which includes the origination fee for loans that require a 20% down payment.

As noted by Joel Kan, an economist at the MBA, “Markets remained focused on potential trade policy changes, while the Fed held the funds rate [at] its current level.”

Trends in Mortgage Applications

While total application volume fell by 2% week-over-week, there was a notable increase in applications specifically for purchasing homes. The purchase loan applications rose by 1%, marking a significant 7% increase compared to the same week last year. This uptick represents the highest demand level seen in nearly two months.

Factors Driving Purchase Activity

According to Kan, this rise in purchase activity is primarily attributed to a 6% increase in applications for FHA loans. The combination of slowly decreasing mortgage rates and an easing housing inventory has provided increased opportunities for potential buyers in this segment.

The Refinancing Landscape

In contrast to the upward trajectory of purchase applications, refinancing demand saw a notable decline. Applications for refinancing fell by 5%, reaching their lowest point in a month. However, this figure is still 63% higher than it was during the same week last year when mortgage rates were 22 basis points higher.

It’s important to note that very few homeowners are in a position to benefit from refinancing today, especially given the historically low rates recorded just three years ago. Nevertheless, homeowners who purchased properties over the last couple of years at higher interest rates may now be considering refinancing options.