Interest rates on US mortgages fell for the first time since late March, giving buyers a sigh of relief and boosting mortgage applications for home purchases and refinancing.
Contract interest rates for 30-year fixed-rate mortgages fell 11 basis points to 7.18% in the week ending May 3, according to data released by the Mortgage Bankers Association on Wednesday. Prior to that, the interest rate had been rising for four consecutive weeks and had risen well above 7%.
The real estate market is one of the most interest-sensitive sectors of the economy. While mortgage interest rates fell last week, Federal Reserve Chairman Jerome Powell said interest rate hikes were unlikely, and data showed that employment and wage growth are slowing.
Boosted by falling borrowing costs, the MBA mortgage application index, which covers home purchases and refinancing mortgage applications, rose 2.6%, and the refinancing index rose 4.5%.
This weekly MBA survey since 1990 used feedback from mortgage bankers, commercial banks, and savings institutions. This data covers more than 75% of all retail residential mortgage applications in the US.