By Favoredjane

Homebuyers Hit the Brakes as Economic Worries Weigh on Mortgage Demand

Washington, D.C., Despite little movement in mortgage rates last week, homebuyers and homeowners continued to back away from the housing market, as concerns over the broader economy and labor market persist.

According to the Mortgage Bankers Association (MBA), mortgage applications for home purchases fell 4% from the previous week, reaching their slowest pace since February. Purchase volume was just 3% higher than the same time last year—even though interest rates were notably higher then.

The average 30-year fixed mortgage rate edged down slightly to 6.89% from 6.90%, with points increasing marginally to 0.67 from 0.66 for loans with 20% down. That rate remains 40 basis points lower than it was a year ago.

“Mortgage application activity, particularly for home purchases, continues to be subdued by broader economic uncertainty and signs of labor market weakness,” said Joel Kan, MBA’s deputy chief economist. He noted that Federal Housing Administration (FHA) purchase applications declined only slightly, buoyed by first-time buyers and rising housing inventory.

Refinance applications also slipped 4% week over week. While still 42% higher than a year ago, refinance activity remains tepid as rates hover near 7%, prompting many borrowers to hold out for a more significant drop. The average refinance loan size dipped to just under $290,000—the lowest in three months.

Mortgage rates stayed relatively flat to start the week, but volatility may lie ahead. A wave of economic data due later this week—culminating in Friday’s closely-watched jobs report—could finally push rates meaningfully in one direction.