US mortgage rates decline to 6.42%, first drop in three weeks

US mortgage rates retreated for the first time in three weeks, helping provide a modest lift to refinancing activity.

The contract rate on a 30-year fixed mortgage decreased 16 basis points to 6.42 per cent in the week ended Jan 6, according to Mortgage Bankers Association (MBA) data released on Wednesday (Jan 11). That helped boost applications for refinancing, which rose 5.1 per cent in the week.

Even with last week’s advance, the refinancing index remains near the lowest level in two decades. Mortgage rates have more than doubled in the last year as the Federal Reserve increases borrowing costs to rein in inflation, which has hampered activity in the housing market.

Homeowners who locked in low rates in the last two years are staying put, keeping applications to purchase depressed. MBA’s purchasing index eased 0.5 per cent last week to an eight-year low.

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 per cent of all retail residential mortgage applications in the US. BLOOMBERG