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Housing: Mortgage Rates, Demand Slip

The Exchange

Mortgage rates continued to slip last week amid mixed economic data, but it didn't bolster mortgage demand from prospective homebuyers, and those who own homes aren't rushing out to refinance.

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The 30-year fixed rate fell to 3.55%, down from 3.59% the week prior, while the 15-year rate held steady at 2.86%. The two-week decline in the 30-year rate followed a one-month rise. Rates are now again near record lows, as you can see in the chart below.

One year ago, the 30-year and 15-year rates were at 4.12% and 3.33%, respectively.

The health of housing, an endless debate, appeared a bit improved earlier this summer as data in August showed more homes sold and inventories of new homes depleted to record lows. By some measures, prices were rising. Are those merely fluctuations?

The recent dip in the 30-year rate did little to bolster demand for refinancing, and applications for new mortgages also decreased. The Mortgage Bankers Association said Wednesday that its market composite index, a measure of mortgage loan volume, decreased 2.5% last week over the week prior. Applications for new mortgages fell 0.8% on a seasonally adjusted basis, and the refinance share of the index fell 3% to its lowest level since May 2012.

Other data this week showed construction spending unexpectedly fell 0.9% in July, after rising 0.5% the month prior.

The biggest economic data of the week, and arguably the month, are yet to come with the August jobs report, which will be released on Friday morning. Economists are expecting the unemployment rate held steady at 8.3% and jobs growth slowed to 136,000, after the U.S. added 163,000 jobs in July.