Brian Van Der Brug | Los Angeles Times | Getty Images The volume of mortgage applications rose 2.7% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. An additional adjustment was made for the Veterans Day holiday. The small increase followed a government report last week that suggested inflation may be starting to ease. This, in turn, sent bond yields down and mortgage rates down with them. Thursday marked the steepest one-day drop in the average 30-year fixed mortgage rate since daily record-keeping began in 2009. On a weekly average, the rate on 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) fell to 6.9% from 7.14%, with points falling to 0.56 from 0.77 (including the origin) for loans with 20% down payment. On a daily basis, the rate on Thursday alone fell by 60 basis points, according to a separate survey by Mortgage News Daily. Applications for mortgage refinancing fell 2% for the week and were 88% lower than the same week a year ago. The rate cut came towards the end of the week and Friday was a federal holiday, Veterans Day, so it is possible that refinancing demand has not yet fully reacted to the rate drop. Home mortgage applications, which generally do not react quickly to interest rate changes, rose 4% on the week and were 46% lower than the same week a year ago. “Purchase applications increased for all loan types and the average purchase loan fell to the smallest amount since January 2021,” said Joel Kan, economist at the Mortgage Bankers Association. Loan sizes may be shrinking too much due to falling home prices or possibly more first-time buyers re-entering the entry-level market. Mortgage rates didn’t move much to start this week, but the yield on the 10-year U.S. Treasury fell on Tuesday first thing in the morning after a monthly reading of U.S. producer prices came in at a slightly slower-than-expected pace. They fell further later, hitting a near six-week low, after news that missiles had struck Poland, killing two people. This sparked fears of greater political risk in the already war-torn region. Mortgage rates loosely track the 10-year Treasury yield.
