Mortgage applications increased 3.1% last week as rates declined for the third week in a row on evidence of a dimming economic outlook, the Mortgage Bankers Association said, citing its Weekly Mortgage Applications Survey.             

The average contract interest rate for conforming 30-year mortgages of $806,500 or less slid six basis points to 6.77% from 6.83% the week before, while the rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration dropped to 6.47% from 6.56%.        

By mortgage type, purchase applications increased 1% week over week and 18% year over year, while refinancing activity rose 5% week over week and 18% year over year.     

“Mortgage rates moved lower last week, following declining Treasury yields as economic data releases signaled a weakening U.S. economy,” MBA Deputy Chief Economist Joel Kan said. “Borrowers sought to take advantage of these lower rates, as both purchase and refinance applications increased over the week. Purchase activity continued to lead 2024’s pace, as increasing for-sale inventory of homes has been supporting homebuying, but on the other hand, recent weakness in the economic environment has deterred some prospective homebuyers. 

“Refinance applications increased to their strongest pace in four weeks after being on a downward trend the prior three weeks. The refinance share increased to almost 42%, its highest level since April.”