Refinance demand dries up after short-lived hot streak

Home buyers and owners are once again rejecting higher rates. 

Last week's hot inflation data didn't shake up mortgage rates, and the average 30-year fixed-rate mortgage fell two basis points to 6.93%, the Mortgage Bankers Association reported. Still, the trade group's Market Composite Index metric of all application volume dipped weekly 6.6%, for the week ending Feb. 14. 

"Purchase applications were down for the week, as buyers remained on the fence, although loosening inventory may help support activity in the coming months," said Joel Kan, the MBA's vice president and deputy chief economist, in a press release.

The setback ends a short-lived refi hot streak, in which the percentage of such application volume was up by nearly double digits in back-to-back weeks. The MBA's Purchase Index dropped 6% and its Refinance Index slid 7% as applications slowed to a crawl similar to the beginning of the year. 

Refinance application volume remains up 39% compared to the same time last year, when the 30-year FRM was slightly lower than today's rates.

Ahead of the spring home buying season, lenders are offering more credit to consumers, although limited to borrowers with better credit. The MBA last week reported conventional credit rising to its highest level in almost three years. Homebuilders, meanwhile, have reported tightening credit in the face of looming international tariffs. 

Interest rates for 30-year Federal Housing Administration-backed loans and 15-year FRMs were close to flat week-over-week, at 6.7% and 6.31%, respectively. The average 30-year jumbo rate again crossed the 7% barrier, climbing 7 basis points to 7.03%.

Adjustable rate mortgages, which have consistently accounted for around 5% of application volume, saw rates for 5/1 products fall 12 basis points to 6.08% last week.