Mortgage rates fall for third week in a row

By Aarthi Swaminathan

Home-buying demand is strong but constrained by low inventory, mortgage lenders say

The numbers: Mortgage rates dipped for the third week in a row, but a low number of homes for sale have curbed home-buying demand.

The 30-year mortgage was averaging at 6.73% in mid-June, which pushed overall mortgage applications up 0.5%.

Demand for both purchases rose while interest in refinancing fell. Overall, that pushed the market composite index -- a measure of mortgage application volume -- up, the Mortgage Bankers Association (MBA) said Wednesday.

The market index rose 0.5% to 209.8 for the week ending June 16 from a week earlier. A year ago, the index stood at 320.4.

Key details: Homeowners didn't see the current environment as a good time to refinance. The refinance index fell 2.1%.

Meanwhile, falling rates drew home buyers in. The purchase index -- which measures mortgage applications for the purchase of a home -- rose 1.5% from the previous week.

The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.81% for the week ending June 2. That's down from 6.91% the week before, the MBA said.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 6.73%, down from 6.77% the previous week.

The 15-year rose to 6.26%, from 6.25% previously.

The rate for adjustable-rate mortgages rose to 6.09% from the previous week's 5.9%.

The big picture: Interest in purchasing a home is strong, but buyers are hampered by a lack of options. There is also little incentive to refinance, since the vast majority of homeowners -- around 92% of homeowners with an outstanding mortgage -- have a rate below 6%, according to real-estate brokerage Redfin(RDFN).

Consequently, the housing market is standing still until either home-buying demand drops off or housing supply improves.

What the MBA said: "First-time homebuyers account for a large share of FHA purchase loans, and this increase is a sign that while buyer interest is there, activity continues to be constrained by low levels of affordable inventory," Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, said in a statement.

He added that the mortgage rate for jumbo loans rose, due to tighter liquidity conditions that have pushed jumbo lenders to pull back.

Market reaction: The yield on the 10-year Treasury note was above 3.7% in early morning trading Wednesday.

-Aarthi Swaminathan

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-21-23 0701ET

Copyright (c) 2023 Dow Jones & Company, Inc.