Mortgage rates declined to their lowest level in a month last week amid concerns about the banking industry, while home loan applications rose for the third straight week.
The Mortgage Bankers Association’s (MBA) Market Composite Index, which measures mortgage application volume, increased 3% from the previous week. Refinance applications jumped 5%, while those to purchase a home were up 2%.
The MBA indicated that the average rate on a 30-year, fixed-rate conforming home loan (up to $726,200) was 6.48%, down from 6.71%. It hasn’t been that low since the week ending Feb. 10.
Yields Down on Banking Turmoil
"The drop in rates was related to the recent turmoil in the banking sector, which sent Treasury yields falling," said Joel Kan, the MBA’s vice president and deputy chief economist. He added that because of the dip in loan costs, "borrowers took the opportunity to act."
Economists at mortgage originator Freddie Mac have made a similar observation, noting that the 30-year rate fell last week to 6.60%. "Turbulence in the financial markets is putting significant downward pressure on rates," explained Chief Economist Sam Khater.