For months, mortgage rates rose with no end in sight, and potential homebuyers backed off. Now the reverse is happening.
The average rate for 30-year fixed-rate mortgages fell for the second week in a row to 6.67 percent, according to the Mortgage Bankers Association. It is now down almost 50 basis points from a peak of 7.16 percent one month ago.
In turn, mortgage loan application volume increased 2.2 percent on a seasonally adjusted basis from one week earlier. Refinances increased 2 percent from the previous week, although they were still 86 percent lower than the same week one year ago, when mortgage rates were much lower.
“The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances — greater than $647,200 — decreased to 6.30 percent.
The turnaround may be fledgling and fragile, but is nonetheless welcome in an industry that has suffered losses and layoffs this year.
Some signs of trouble in the nation’s housing market did emerge last month. The delinquency rate rose 12 basis points from September to 2.91 percent, driven by a 9.4 percent rise in 30-day delinquencies, according to Black Knight.
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The firm noted that Florida led the jump in new early delinquencies, with the state’s delinquency rate rising 53 basis points to 3.42 percent. The rate’s 18 percent increase is likely attributable in part to Hurricane Ian.
The foreclosure process was initiated on 7 percent more properties than in September. But foreclosure starts are still 55 percent below pre-pandemic levels, according to Black Knight.
That is because lenders are going easier on troubled borrowers than they did before the pandemic. They began the process on just 4 percent of seriously delinquent mortgages in October, less than half the rate of the years leading up to the pandemic.
Though when mortgage rates hit 6 percent in September, it made headlines for being the highest since 2008. Now, some homebuyers view anything below 7 percent with a sense of relief.