Mortgage rates last week dropped to the lowest level in a month, pushing more borrowers to refinance. Potential homebuyers, however, were not as enthused.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, decreased last week to 6.37% from 6.42%, with points falling to 0.59 from 0.61, including the origination fee, for loans with a 20% down payment.

As a result, applications to refinance a home loan, which are most sensitive to weekly changes in interest rates, rose 4% for the week and were 81% higher than the same week one year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. The rate on the 30-year fixed was 15 basis points higher a year ago. A basis point is 0.01 percentage point.

​​Applications for a mortgage to purchase a home dropped 5% for the week and were 20% higher than the same week one year ago. Buyers are finding more supply on the market, and prices are starting to soften slightly in some areas, but there are those who are waiting, expecting rates to come down even further. 

We closely monitor mortgage rates, as they’ve been the single most influential factor driving buyer demand over the past several years.