Fed Rate Cut Ignites Mortgage Rate Surge

Last week, the Federal Reserve's decision to cut its benchmark interest rate unexpectedly led to an increase in mortgage rates. This move caused a noticeable decline in demand for home loans and refinancing.

Specifically, the Mortgage Bankers Association reported a 3.8% decrease in total mortgage application volume compared to the prior week. The average interest rate for a 30-year fixed-rate mortgage with a conforming loan balance rose from 6.33% to 6.38%, with associated points also increasing.

While applications for refinancing a home loan fell by 4% week-over-week, they remain substantially elevated, standing 86% higher than the same period in the previous year. This trend suggests that while new purchases may be slowing, homeowners who secured loans at higher rates previously could still find benefit in refinancing.