Robin Azougi 1st R, a licensed real estate seller with Douglas Elliman Real Estate, speaks to prospective buyers at a home for sale in Floral Park, Nassau County, New York on September 6, 2020.

Wang Ying | Xinhua News Agency | Getty Images

Lower mortgage rates don’t induce homeowners or potential buyers to turn to their lenders as other obstacles stand in the way.

According to the seasonally adjusted index of the Mortgage Bankers Association, the total volume of mortgage applications in the past week is down 2.5% compared to the previous week.

The decline was despite the fact that the average contract rate on 30-year fixed rate mortgages with compliant loan balances ($ 548,250 or less) decreased from 3.20% to 3.17% and the credit score decreased from 0.36 (including the origination fee) decreased to 0.30% with a deposit of 20%. That is the lowest rate since the end of February.

Applications for refinancing a home loan, which are very sensitive to weekly interest rate changes, still fell by 1% over the course of the week and were 18% below the previous year’s figure. The interest rate on the 30-year fix was 26 basis points higher a year ago, but interest rates were at record lows last fall, well below the current rate.

“Even with a few weeks of lower interest rates, most borrowers are likely to have funded themselves, so activity has declined in seven of the last eight weeks,” said Joel Kan, vice president of economic and industrial forecasting for MBA.

Home purchase mortgage applications fell 5% over the week and were 34% higher than a year ago. The yearly comparison means little now, however, as the real estate market stalled around this time last year when the pandemic lockdown hit. In summer it recovered dramatically and is only now losing steam.

Home buyers compete for the record low number of houses for sale against bidding wars. As a result, house prices are skyrocketing at the fastest pace in 15 years. Even today’s slightly lower interest rates are not enough to offset the ever-increasing cost of buying a home. Purchase requests have been falling for four of the last five weeks.

“While buyers were eager in early 2021, sellers held back,” said Danielle Hale, chief economist at realtor.com. “We saw 200,000 fewer new sellers than we would normally see in January and February, and an additional 117,000 new sellers were absent compared to the typical March year. These trends have created extremely frustrating trends for buyers, especially newbies.” “