A decline in the rate on a 30-year mortgage had a positive effect on several areas of the real estate market in the past week.
“The 30-year fixed rate saw the largest weekly decline since 2020, falling 31 basis points to 5.43%,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The drop in rates led to increases in both refinance and purchase applications, but compared to a year ago, activity is still depressed.”
The mortgage rate fell from 5.74%.
That move set off a domino effect with the refinance index rising 2% from the prior week.
The seasonally adjusted purchase index increased 1% from the week before.
Overall demand for mortgage applications was on the rise, gaining 1.2% in the past week.
“Lower mortgage rates, combined with signs of more inventory coming to the market, could lead to a rebound in purchase activity,” added Kan.
The Federal Reserve raised its benchmark interest rate by 75 basis points last week, in an attempt to rein in rising inflation. The move puts the key benchmark federal funds rate at a range of 2.25% to 2.50%, the highest since the pandemic began two years ago.
The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.