Even so, demand for mortgages remains elevated and is much stronger than it was a year ago. If you spot a low rate, don't snooze and lose — but lock that rate so it won't get out of your grasp.
Mortgage refinances dip
Overall mortgage applications fell 6.4% during the week ending Feb. 14, the Mortgage Bankers Association reported Wednesday.
Requests for refinance loans fell 8%, after hitting a seven-year high the previous week. Even so, it was the third biggest week for refis so far in 2020. And demand was up 165% compared to the same week in 2019.
In other words, lenders were dealing with more than two and a half times the number of refinance applications as they were a year earlier.
Homeowners can refinance and slash their monthly payments and their total interest costs, even if their current mortgages were taken out as recently as 2018. You can review refi offers from multiple lenders by using the Mortgage Research Center.
The share of mortgage applications for refinance loans slipped last week to 63.2%, from 65.5% the previous week.
Shortage of affordable homes keeps homebuyers from borrowing
Last week also saw a drop in demand for the mortgages sought by homebuyers.
"Purchase applications fell 3% last week, as there continues to be some pullback after a strong January," says Joel Kan, the vice president of forecasting for the Mortgage Bankers Association.
"Activity was still 10% higher than a year ago, but too few options — especially at the lower portion of the market — are slowing some would-be buyers," Kan says.
Builders are doing what they can to increase the supply of homes. The Commerce Department said Wednesday that new home construction in January was up 21.4% compared to a year earlier, and building permits surged to the highest level since March 2007.
Are you in the market to buy a home? The calculator below shows the kind of monthly payment you can expect from one of today's low mortgage rates.
Coronavirus is likely to keep mortgage rates low
Mortgage rates inched up last week after declining for three straight weeks.
The average for a 30-year fixed-rate mortgage went from 3.45% to 3.47% — still close to a three-year low and not too far off the all-time low of 3.31% seen in nearly 50 years of weekly surveys from mortgage giant Freddie Mac.
One year ago, the benchmark mortgage rate was nearly a full point higher, at an average 4.37%.
Mortgage rates have been sinking while investors pour money into Treasury bonds as a safe place for their money amid all of the uncertainty over the coronavirus. As demand for Treasuries rises, their yields (interest rates) fall, and mortgage rates tend to move along the same track.
Rates on 15-year fixed-rate mortgages were unchanged last week, at an average 2.97%. Those loans are a popular refinance option.
And the average initial rate on 5/1 adjustable-rate mortgages fell to 3.28%, from 3.32% a week earlier. "ARMs" are fixed for five years, and after that the rates can adjust up or down each year.
Take a look at today's best mortgage rates where you live.