(Jan 14): US mortgage rates slid last week to one of the lowest levels in years, sparking a flurry of purchase and refinancing activity that offers hope for a plodding housing market.
The contract rate on a 30-year mortgage dropped seven basis points to 6.18% in the week ended Jan 9, according to Mortgage Bankers Association (MBA) data released on Wednesday. That’s the lowest reading since September 2024 and one of the lowest since 2022.
The rate on a five-year adjustable mortgage plunged nearly a half percentage point to 5.42%, the second-lowest since May 2023.
Against a backdrop of cheaper home-financing costs, MBA’s purchase index increased nearly 16% last week to the second-highest level since February 2023. The refinancing gauge jumped by more than 40%, the most since September. Large weekly swings in mortgage activity are typical around the turn of the year and near holidays.
Nonetheless, the figures illustrate some relief for a housing market that’s been battered by poor affordability in recent years. Government data out on Tuesday showed the annualised pace of new-home sales in October was near the strongest since 2023, helped by builder incentives and price cuts.
In hopes of improving housing affordability, President Donald Trump has proposed banning institutional investors from buying single-family homes. He also directed Fannie Mae and Freddie Mac to purchase US$200 billion in mortgage bonds in an effort to lower home-financing costs.
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The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
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