Mortgage demand drops to lowest in two months as would-be homebuyers wary of US economy

Homebuyers continued to retreat last week despite relatively stable mortgage rates as broader concerns about the economy and labor market weighed on demand.Mortgage applications to purchase a home fell 4% from the previous week, according to the Mortgage Bankers Association — marking the slowest pace of activity since February.The seasonally adjusted index showed that purchase application volume was just 3% higher than the same period a year ago even though interest rates were notably higher at that time.This suggests that elevated home prices and economic anxiety may now be playing a more significant role in holding back buyers than interest rates alone.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — $806,500 or less — dipped slightly to 6.89% from 6.90% the previous week.For borrowers making a 20% down payment, the average points charged on those loans rose marginally to 0.67 from 0.66, including the origination fee.While the current rate is roughly 40 basis points lower than it was a year ago, the modest decline has not been enough to spur a significant increase in homebuying activity.“Mortgage application activity, particularly for home purchases, continues to be subdued by broader economic uncertainty and signs of labor market weakness, dropping to the slowest pace since February,” Joel Kan, vice president and deputy chief economist at the MBA, told CNBC.“With slowly-increasing housing inventory in many markets and first-time homebuyers still in the mix, FHA purchase applications fared better with only a slight decline.”Applications for refinancing also declined by 4% over the week.However, volume remained 42% higher than during the same period last year, when interest rates were much higher and refinancing was at a near standstill.“Refinance activity dipped again, as mortgage rates remained close to 7%, and borrowers hold out for a bigger decline in rates,” Kan noted.Morning Report d...