Mortgage loan applications slipped by 0.3 percent in the week that ended on Oct. 17, marking a fourth consecutive weekly decline, the MBA’s latest Weekly Mortgage Applications Survey shows.

While new purchase activity has cooled over the past month, refinancing demand remains strong.

Refinance activity rose by 4 percent from the previous week and is up by 81 percent from a year ago, “as borrowers remain attentive to these opportunities to lower their monthly mortgage payment,” according to Joel Kan, MBA’s deputy chief economist and vice president.

The data indicate that conventional refinances have risen by 6 percent from last week, and Federal Housing Administration refinance applications have increased by 12 percent.

Mortgage borrowing costs have declined for the third straight week, with the average contract interest rate on 30-year fixed-rate mortgages at 6.37 percent.

Despite the tariff-driven springtime volatility in the financial markets, interest rates have dropped sharply over the past 10 months, declining from the mid-January high of 7.09 percent.

The steady downward trend in rates has also bolstered the adjustable-rate mortgage (ARM) market.

Applications for ARMs—interest rates that change periodically with market conditions—increased by 16 percent from last week. They now account for 11 percent of the mortgage market, “with the ARM rate more than 80 basis points lower than the 30-year fixed rate,” according to Jeff DerGurahian, LoanDepot’s chief economist and chief investment officer.

The prospect of sub-6 percent mortgage rates by the end of the year is “within reach,” DerGurahian said, signaling potential relief for the U.S. housing market.

“Mortgage rates are trending lower, and the market is setting up for a potentially more accommodative Fed,” he told The Epoch Times in an email. “With CPI data due Friday and the Fed meeting on Oct. 29, expectations for easing remain strong. If inflation stays contained and labor data softens, the path to sub-6 percent mortgage rates by year-end is well within reach.”

Despite the government shutdown, now in its fourth week, the Bureau of Labor Statistics will publish the September consumer price index (CPI) report this week.

The federal funds rate is a key benchmark policy rate that influences borrowing costs for businesses, households, and governments.

Traders also anticipate another quarter-point reduction at the FOMC meeting on Dec. 9 and Dec. 10.

Although inflationary pressures have risen at a modest pace in recent months, year-over-year inflation at 3 percent and beyond is unlikely to force the U.S. central bank to pivot away from its current dovish stance, according to Stephen Kates, financial analyst at Bankrate.

“Inflation at that level is still unlikely to derail a potential Federal Reserve rate cut in October. A cut at the end of the month would cement the Federal Reserve’s pivot from a focus on inflation toward increased concern over the labor market,” Kates told The Epoch Times in a statement.

Home prices rose by 0.2 percent in September—matching the previous month’s increase. Compared to the same time a year ago, prices were up by 3 percent, down from 3.3 percent in August and below the 6 percent growth observed earlier in the year.

Ultimately, last month’s reading represented the slowest annual increase in the group’s data since 2012.

“Prices are relatively flat because both buyers and sellers are cautious right now,” said Sheharyar Bokhari, Redfin’s senior economist. “Buyers have more options than they did a year ago.”

Still, affordability remains a top concern, with many households refraining from making major purchases because of worries about the labor market and the broader economy.

“Sellers, meanwhile, have to price carefully, knowing that overreaching can lead to their home sitting on the market. The result is a market where prices are inching up slowly each month,” Bokhari said.