NEW YORK — U.S. mortgage rates declined for the first time in about two months, but demand for home purchases continued to weaken.
The average contract rate on 30-year fixed-rate mortgages fell to 7.41% last week from 7.50% the previous week, a drop of 0.09 percentage points, according to the Mortgage Bankers Association on the 21st. It was the first decline in roughly two months, the MBA said. The rate had climbed every week after registering 6.77% during the Aug. 13-19 period.
Even with the lower rate, total mortgage applications fell 5.3% from the prior week. Applications to purchase homes dropped 7% week-on-week and were down 18% from a year earlier. Refinancing applications, filed by borrowers seeking to replace existing loans, slid 2% from the previous week and plunged 59% year-on-year.
The sluggish housing market reflects a surge in U.S. Treasury yields driven by accelerating inflation. As mortgage rates have risen, homeowners who locked in lower rates are increasingly abandoning plans to refinance. Potential buyers also face mounting financing costs.