The decrease in mortgage rates has stimulated an overall increase in demand for mortgage loans, particularly in the areas of home purchasing and refinancing activities.

Data indicates that mortgage rates dropped by 25 basis points last week, marking the largest decline since July 2022. This move has slightly stimulated overall mortgage demand.

The Mortgage Bankers Association (MBA) of the United States reported that the overall market composite index measuring mortgage application volume saw a recent increase, rising by 2.5% compared to the previous week, reaching 165.9. A year ago, this index was at 199.9.

In terms of housing demand specifically, the purchase index, which measures mortgage applications for home purchases, rose by 3% from the previous week. Simultaneously, there was a slight increase in refinancing activities, with the refinancing index rising by 1.6%. These data indicate that consumers' positive response to the decrease in rates has led to an increase in housing demand, thereby stimulating mortgage demand.

Regarding specific rate levels, the average contract interest rate for 30-year home mortgages with a price lower than $726,200 is 3.61%, while for those priced over $726,200, the rate is 3.58%.

Furthermore, the average rate for 30-year mortgage loans supported by the Federal Housing Administration has dropped from 3.57% to 3.36%, and there has also been a decrease in the average rate for 15-year mortgage loans. This suggests that different types of mortgage rates are showing a downward trend.

Joel Kan, the MBA's Associate Vice President of Economic and Industry Forecasting, pointed out that the reasons for the rate drop include updates from the US Treasury on issuances, the dovish tone expressed by the Federal Reserve in its November Federal Open Market Committee statement, and data indicating a slowdown in the job market. This indicates that the rate decline has been influenced by various factors, including policy changes and shifts in economic data.