Mortgage rates have fallen for the second consecutive week, which has finally drawn consumers back to brokers again. However, an increasing number of people are applying for loans with even lower rates, but also higher risks.

The seasonally adjusted index from the Mortgage Bankers Association of America ( Mortgage Bankers Association ) shows that total mortgage applications last week increased by 3.4% compared to the previous week.

For 30-year fixed-rate mortgage loans that meet the loan amount criteria and have a loan balance not exceeding $832,750, the average contract interest rate has decreased from 7.41% to 7.37%; with a down payment of 20%, including issuance fees, the point cost has increased from 0.75 to 0.76.

"The decline in interest rates has provided some relief to borrowers, and there has been a slight rebound in applications, especially for traditional loans," said Joel Kan, Vice President and Deputy Chief Economist of MBA, in a statement. "Mortgage rates are still more than one percentage point higher than the same period last year, and the rates for most homeowners are still far below current market rates."

This is also why the refinancing business is still significantly lagging behind the same period last year. Last week, applications for mortgage refinancing increased by 3%, but were still 61% lower than in the same period a year ago. According to data from the Federal Housing Finance Agency's National Mortgage Database, approximately half of borrowers now have mortgage rates below 4%.

Applications for home purchase loans increased by 4% last week, but are still 18% lower than the same period last year. Although mortgage rates have fallen in the past few weeks, they are still much higher than they were a few months ago, and housing prices continue to rise. Potential homebuyers are also concerned about the broader economic situation; according to some agents, buyers are waiting for the results of the mid-term elections.

As borrowers seek to save costs, more people are opting for adjustable-rate mortgages ( ARM ). Last week, the proportion of ARM applications rose to 11.3%, the highest level in over a year. The average contract rate for 5/1 ARM decreased from 6.46% to 6.41%. ARM is considered riskier because its interest rate is adjusted to the current market rate at the end of the fixed term.

According to another survey by Mortgage News Daily, there have been no changes in mortgage rates at the beginning of this week. This is because there is not much economic data available for the bond market to react to. Although the market expects that the Federal Reserve will not announce any interest rate adjustments at its meeting on Wednesday, the market could still fluctuate due to any statements made by Federal Reserve Chairman Kevin Warsh.