Purchase loan applications have surged for two weeks in a row, but rates for conforming mortgages are inching back up toward 7 percent this week as investors weigh the odds of Fed rate cuts.
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Homebuyer demand for purchase rates picked up last week for the second week in a row, as mortgage rates dropped to the lowest levels since March. But rates for conforming mortgages are once again inching back toward 7 percent this week as investors weigh the odds of Fed rate cuts later this year.
Applications for purchase loans were up by a seasonally adjusted 2 percent last week compared to the week before, according to a weekly survey of lenders by the Mortgage Bankers Association. While it was the second consecutive week-over-week increase in demand for purchase mortgages, applications were still down 12 percent from a year ago.
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Refinancing applications during the week ending June 14 were essentially flat from the week before, but up 30 percent from a year ago.
Mike Fratantoni
“Mortgage rates dropped last week following the latest inflation data and the [Federal Reserve] meeting, with the 30-year conforming rate dropping to 6.94 percent and reaching its lowest level since the end of March,” MBA Chief Economist Mike Fratantoni said in a statement Wednesday.
Federal Reserve policymakers held rates steady at their June 12 meeting, saying they wanted more evidence that inflation is subsiding before cutting interest rates.
But the Fed only has direct control over short-term rates. Bond market investors who fund most mortgages brought long-term rates down sharply last week after seeing the latest Consumer Price Index reading, which showed inflation eased in May.
Mortgage rates came down again the next day on reports showing May jobless…