The interest rate on the popular 30-year fixed mortgage moved lower last week for only the second time since September, but that was not enough to entice consumers to call their lenders.
Mortgage application volume was unchanged last week from the previous week, according to the Mortgage Bankers Association.
Applications to refinance a home loan, which usually rise when rates fall, did just the opposite, falling 1 percent for the week on a seasonally adjusted basis. Refinance volume stood 36.5 percent lower than the same week one year ago, when interest rates were lower.
Last week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less decreased to 4.18 percent from 4.22 percent, with points decreasing to 0.38 from 0.43, including the origination fee, for 80 percent loan-to-value ratio loans.
"Treasury yields weakened last week following the release of more details around the administration's tax reform plan and the announcement of a new Fed chair," said MBA economist Joel Kan. "There was an almost 8 percent increase in FHA refinance applications over the week following a two-basis-point decrease in the FHA rate."
FHA loans, which are insured by the government and offer loans with down payments as low as 3.5 percent, are often favored by first-time buyers, or lower-income buyers who cannot afford higher down payments.
Mortgage applications to purchase a home did move higher by 1 percent for the week and volume now stands 9 percent higher than the same week one year ago.
Potential homebuyers have been less worried about interest rates and more concerned with the low supply of homes for sale and rising prices. Sentiment among homebuyers dropped in September, according to a monthly survey by Fannie Mae, which funds home loans.
Mortgage rates continued to move lower this week and are now at their lowest levels in about three weeks. Daily moves, however, have been small, as investors look to Washington for their next move.
"Underlying financial markets have been calm so far this week as investors wait for any relevant details regarding the tax-reform process," wrote Matthew Graham, chief operating officer of Mortgage News Daily. "It's already looking like bigger news will be on hold until next week at the earliest."