The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.40% from 6.45%, with points falling to 0.59 from 0.62 (including the origination fee) for loans with a 20% down payment. It had been over 7% just a month ago.

Mortgage applications to purchase a home, however, dropped 4% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand was 35% lower than the same week one year ago.

New listings were down 20% year over year in March, according to Realtor.com, and total inventory was about half of what it was in March 2019, pre-Covid pandemic.

Most jumbo loans are held on bank balance sheets.

Demand for Federal Housing Administration and Department of Veterans Affairs loans, which are favored by lower-income borrowers due to low down payment requirements, declined more than those for conventional loans. While there is strong demand from first-time homebuyers, with millennials hitting their peak buying age, affordability is still a challenge right now.

Applications to refinance a home loan also dropped, down 5% for the week and 59% lower than the same week a year ago. The refinance share of mortgage activity decreased to 28.6% of total applications from 29.1% the previous week. Rates are 150 basis points higher than they were at the same time last year, so there are precious few borrowers who can now benefit from a refinance.