After rising the previous week, interest rates fell back again last week, but consumers were not enthused.
Overall mortgage application volume fell 1.9% for the week, according to the Mortgage Bankers Association's seasonally adjusted index. Volume was still 34% higher than a year earlier, thanks to a stronger refinance market this year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.08% from 4.12%, with points decreasing to 0.33 from 0.38 (including the origination fee) for loans with a 20% down payment.
Last year, the average mortgage rate was 69 basis points higher. That's why overall refinance demand is stronger now.
Refinance application volume did fall 2% last week, despite the rate drop, but was 81% higher than the same week one year ago.
"Mortgage rates right now are comparable to the average rate of 4.10% for June, but refinances last week were 7% lower than last month," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "This is an indication that as we see rates lower for longer, borrowers need more of a drop in rates to consider refinancing."
Mortgage demand for buying a home decreased 2% for the week but was 6% higher than a year earlier. Buyers may be getting used to low mortgage rates and more concerned about overall affordability. Sales of existing homes fell again in June, despite a sharp drop in mortgage rates during the month.