Photo: Warren LeMay / CC BY-SA 2.0 (archive)
Mortgage rates fell for a third consecutive week, but fewer Americans applied for loans to buy homes, a sign that modest borrowing-cost relief has yet to bring buyers back.
The average contract rate on a 30-year fixed mortgage with a conforming balance dropped to 7.30% from 7.37% in the Mortgage Bankers Association’s survey for last week, CNBC reported Wednesday. The figure is a survey average for last week, not a guaranteed rate available to a borrower today.
For homebuyers, the lower average offers some relief, but financing remains expensive. For sellers and housing businesses, the application figures suggest that a small rate decline alone has not restored demand.
Purchase applications fall again
Applications for mortgages to purchase homes declined 2% from the previous week and were 19% below the same week a year earlier. The weekly comparison comes from MBA’s seasonally adjusted survey.
The 7.30% average applied to conforming loan balances of $832,750 or less. Points fell to 0.75 from 0.76, including the origination fee, for loans with a 20% down payment. Those loan terms matter when comparing the headline rate with another lender’s offer.
MBA chief economist Mike Fratantoni said rates had moved to their lowest level since September following the Federal Reserve’s October decision to hold off on additional rate increases, according to CNBC.
Refinancing remains far below last year
Refinance applications edged up just 0.1% for the week and were 60% lower than a year earlier. CNBC reported that mortgage rates remained about a percentage point above their level at the same time last year, limiting the incentive for borrowers to replace existing loans.
That leaves the housing market with two separate weak spots: fewer applications from buyers and very little weekly improvement in refinancing activity.
Borrowers look at adjustable rates
The average rate on a 5/1 adjustable-rate mortgage fell to 6.29% from 6.41%. Fratantoni said more borrowers were choosing adjustable-rate mortgages to reduce their initial payments, with their share of applications at its highest since September 2025.
The lower initial rate comes with a trade-off: payments can change when the loan resets. It should not be treated as the same long-term borrowing commitment as a fixed-rate mortgage.
The report’s message is straightforward. Last week’s rates were lower, but purchase applications still fell. The decline in borrowing costs has not yet been enough to turn the demand figures around.
JBizNews Desk | New York
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