Mortgage rates held steady last week, leading to renewed activity among homebuyers even as challenges persist in the spring housing market. According to the Mortgage Bankers Association, the total volume of mortgage applications has fallen by 2% compared to the previous week, primarily driven by declining refinance demands.

Current Trends in Mortgage Rates

The average interest rate for a 30-year fixed mortgage on conforming loans, which are set at $806,500 or less, saw a slight decrease, moving from 6.72% to 6.71%. Additionally, the points charged (which include the origination fee) dropped from 0.64 to 0.60 for loans with a 20% down payment.

Joel Kan, an economist at the MBA, noted, “Markets remained focused on potential trade policy changes, while the Fed held the funds rate [at] its current level.” This stability in interest rates contributes to the fluctuating dynamics of the housing market.

Homebuyer Activity Shows Signs of Life

Despite the overall decline in mortgage applications, there was a 1% increase in applications to purchase homes, marking a 7% rise from the same period last year. This uptick is notable as it signals the strongest demand observed in nearly two months.

This recent activity has been largely influenced by a significant rise in FHA loan applications, which increased by 6%. The combination of easing housing inventory and slowly falling mortgage rates has created favorable opportunities for buyers in this segment.

Refinance Applications Face Significant Challenges

Conversely, applications for refinancing dropped by 5% from the previous week, reaching the lowest level recorded in a month. Nevertheless, when compared to the same week last year, refinance applications have surged by 63%, reflecting the striking contrast to last year’s higher mortgage rates.

Many homeowners currently face difficulties finding advantageous refinancing options, particularly those who secured mortgages at historical lows three years ago. Only recent buyers, who purchased homes at elevated rates in the last two years, may find themselves in a position to refinance successfully.