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Mortgage interest rates fell for the third straight week, while mortgage demand also rose again.

Total application volume increased 7% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.2% from 6.23%, with points increasing to 0.69 from 0.67 (including the origination fee) for loans with a 20% down payment. That rate was just about half that one year ago.

Applications to refinance a home loan saw the sharpest gains, up 15%, compared with the previous week. They were still 77% lower than the same week a year ago, but that annual gain is now shrinking fast.

Mortgage applications to purchase a home rose 3% for the week but were 39% lower year over year. Homebuyers are still trickling back into the market, as house prices ease slightly. There is still, however, precious little to choose from with inventory low.

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