“The Federal Reserve raised its short-term rate target last week, but longer-term rates, including mortgage rates, declined for the week, with the 30-year conforming rate reaching 6.34% – its lowest level since September,” he said. “Refinance application volume increased slightly in response but was still about 85% below year-ago levels.”
The refinance share of mortgage activity grew nearly two percentage points to 31.3% of total applications, and the adjustable-rate mortgage share decreased to 7.5%.
“The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the US is likely to enter a recession,” Fratantoni said. “However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.”