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In the real estate market, the weekly demand for mortgages has remained relatively unchanged, even though interest rates remain high. CNBC reports that despite a slight drop in the average interest rate for 30-year fixed-rate mortgages, fewer people are applying for loans to refinance their existing mortgages or purchase homes.

The Mortgage Bankers Association's seasonally adjusted index revealed that total mortgage application volume essentially remained flat, dipping a mere 0.6% from the previous week. Specifically, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) slipped slightly from 6.93% to 6.91%.

Meanwhile, applications for refinancing homes decreased by 2% for the week, marking a 5% decline compared to the same period one year ago. After rates hovered around the 7% mark for several months, nearly 90% of existing borrowers still hold mortgages with rates below 6%.

Likewise, there was a slight decrease of 0.1% in applications for mortgages to purchase homes compared to the previous week, contributing to a significant 13% decline compared to the same week of the previous year. This decrease in purchase demand starkly contrasts the robust homebuying activity observed in March 2020, fueled by the Federal Reserve's rate cuts, which triggered a surge in demand that quickly depleted housing inventory.

However, with current mortgage rates double those seen during that period, prospective buyers face constraints on their purchasing power, while sellers are confronted with a subdued market characterized by limited demand.

Mortgage rates rose at the start of the week, driven by manufacturing data and growing apprehensions about escalating prices. Matthew Graham, the Chief Operating Officer at Mortgage News Daily, stressed the significant influence of inflation on pushing rates upward, highlighting that if inflation persists, rates may encounter challenges in finding compelling reasons to rally.

As the week progresses, market participants eagerly await further economic indicators to influence the trajectory of mortgage rates.