U.S. 30-year mortgage rate falls for first time since March

U.S. mortgage rates fell for the first time since late March, giving some relief to homebuyers and lifting applications for purchases and refinancing.

The contract rate on a 30-year fixed mortgage fell 11 basis points in the week ended Friday to 7.18%, according to Mortgage Bankers Association data released Wednesday. It marks the first drop following four straight weekly increases that brought borrowing costs well above 7%.

The housing market is one of the most interest-rate sensitive parts of the economy. Mortgage rates fell during a week when Federal Reserve Chair Jerome Powell said a rate hike was “unlikely” and data showed a slowdown in payrolls and wage growth.

The dip in borrowing costs helped boost the MBA’s index of applications, which includes home purchases and refinancing, by 2.6%. The refinancing index climbed 4.5%.

Still, rates remain high – more than double what they were at the end of 2021 – and a low inventory has kept sales of previously owned homes at an annual rate of around 4 million homes for the past year, “without a measurable breakout,” National Association of Realtors Chief Economist Lawrence Yun said late last month.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data covers more than 75% of all retail residential mortgage applications in the U.S.