Fewer homebuyers jumped into the mortgage market last week even though interest rates hit their lowest levels in five months.
Total mortgage applications decreased last week by 1.8 percent from the previous week, according to the Mortgage Bankers Association. Total volume is down 23.5 percent from the same week last year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) dropped to its lowest levels since November, dropping to 4.22 percent from 4.28 percent, with points falling to 0.35 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio loans.
"Mortgage rates dropped to their lowest level since November 2016, as geopolitical tensions continued to rise," said MBA chief economist Mike Fratantoni. However, he added, "rates are still too high to attract much interest from homeowners looking to refinance, and purchase activity was relatively weak."
Applications to purchase a home fell 3 percent from the previous week and 1 percent from a year ago. Refinance applications increased only slightly by 0.2 percent from a week ago, but are down 41.5 percent from last year. Refinance applications increased to 42.4 percent of total applications, up from 41.6 percent the previous week.
The MBA doesn't expect the mortgage market to remain slow through the season.
"We do expect a pickup in purchase activity through the remainder of the spring season. With a strong job market and signs of continuing economic growth, we are forecasting roughly 9 percent growth in purchase origination volume for 2017 relative to 2016," Fratantoni said.