Mortgage rates fell slightly this week as more newly listed homes entered the spring housing market.
The 30-year fixed-rate mortgage averaged 6.88% in the week ending March 7, falling 0.06 percentage points from last week's 6.94%. A year ago, the 30-year fixed rate averaged around 6.73%, according to data from Freddie Mac's Primary Mortgage Market Survey.
The mortgage rate for the 15-year fixed loan also declined 0.04 percentage points to 6.22% from 6.26% the previous week. A year ago, the average 15-year fixed rate was 5.95%.
Thursday's decline marks the end of a four-week streak of rising mortgage rates. Sam Khater, Freddie Mac's chief economist, said the decline in mortgage rates likely drew more people to the spring housing market.
"Evidence that purchase demand remains sensitive to interest rate changes was on display this week, as applications rose for the first time in six weeks in response to lower rates. Mortgage rates continue to be one of the biggest hurdles for potential homebuyers looking to enter the market," he said.
Mortgage Demand Rose by 11%
Applications for a mortgage rose 9.7% in the week ending March 1 from the week before, per a recent report from the Mortgage Bankers Association. Applications for a loan to purchase a home were also up 11% from a week earlier, while refinance applications increased by 8% in the same week on a seasonally adjusted basis.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, particularly those amounting to $766,550 or less, decreased to 7.02% from 7.04%.
In addition, applications for Federal Housing Administration (FHA) loans also increased last week. This points to a rising interest in purchasing a home from first-time buyers, the MBA report noted.
"Of note, purchase volume - particularly for FHA loans - was up strongly, again showing how sensitive the first-time homebuyer segment is to relatively small changes in the direction of rates," Mike Fratantoni, senior vice president and chief economist at the MBA, said.
The rising demand comes after new listings of homes rose 13% year over year during the four weeks ending February 25, according to Redfin.
