Mortgage demand climbs to the highest level in five weeks after interest rates move lower, per CNBC.

Current homeowners and potential homebuyers are slowly responding to the decline in mortgage rates.

According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage demand increased by 2.8% last week compared to the previous week, marking the second consecutive week of gains.

Despite a significant drop in the previous week, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) remained steady at 7.61% last week. Points decreased to 0.67 from 0.69, including the origination fee, for loans with a 20% down payment.

Joel Kan, MBA’s vice president and deputy chief economist, noted, “Although Treasury rates dipped midweek, mortgage rates were little changed on average through the week.”

Refinance applications saw a 2% increase for the week and were 7% higher compared to the same week last year. However, the similarity in mortgage rates between this month and November of the previous year provides limited new incentives for refinancing.

Purchase mortgage applications rose by 3% from the previous week but were 12% lower than the same week a year ago. Lower rates may offer some relief, but the continued rise in home prices and the limited housing supply present significant challenges for potential buyers in today's market.

Kan added, “Both purchase and refinance applications increased to the highest weekly pace in five weeks but remain at very low levels. Despite the recent downward trend, mortgage rates at current levels are still challenging for many prospective homebuyers and current homeowners.”