Rates drop after two months

The average contract interest rate for thirty-year fixed-rate mortgages with conforming loan balances fell to seven point four one percent from seven point five zero percent last week.

But demand keeps falling

Total mortgage application volume fell five point three percent week on week, according to the Mortgage Bankers Association's seasonally adjusted index.

Home buyers pull back sharply

Applications to purchase a home declined seven percent for the week and were eighteen percent lower than the same week one year ago.

Refinancing demand collapses

Refinance applications fell two percent week to week but were fifty nine percent lower than the same week one year ago, as rates remain over a full percentage point higher than a year ago.

Buyers shift to riskier mortgages

The ARM share held steady at ten point five percent, as adjustable-rate mortgage rates remained almost a full percentage point lower than the thirty-year fixed rate.

“The ARM share held steady at 10.5 percent, as ARM rates remained almost a full percentage point lower than the 30-year fixed rate, giving qualified borrowers a lower rate option to purchase a home.”

Rate moves no longer move buyers

Joel Kan, an MBA economist, said lower rates were not enough to boost application activity, as both purchase and refinance applications continued to decline.

“Lower rates were not enough to boost application activity, as both purchase and refinance applications continued to decline.”