Mortgage Rate Drop Not Raising Demand For Housing Applications

The big drop this month in mortgage rates has yet to raise demand for purchase applications which, in the October 24 week, fell a sharp 5.0 percent for the second straight week. And the trend for purchase applications is suddenly moving lower with the year-on-year rate, which had been in the low negative double-digits, now at minus 15 percent.

The rate drop is, however, stirring up refinancing demand which, however, fell 7.0 percent in the latest week that follows a giant 23.0 percent surge in the prior week. The report notes special activity among holders of jumbo loans ($417,000 and greater), a group that is most sensitive to rate changes and where application volumes have been doubling and tripling this month.

Rates moved back higher in the latest week with jumbo balances for 30-year fixed mortgages rising 10 basis points to an average 4.13 percent. The average rate for 30-year conforming balances ($417,000 or less) rose 3 basis points and is also at 4.13 percent.