Mortgage demand surged last week as interest rates saw a notable shift, resulting in increased activity across various loan categories. According to the Mortgage Bankers Association's seasonally adjusted index, total mortgage applications rose by 11.2% week-to-week. This uptrend is attributed to several factors, including a decline in mortgage rates and a significant rise in refinancing applications.
Applications to refinance a home loan increased by 16% from the previous week, marking a substantial jump of 90% compared to the same period last year. This surge indicates homeowners are keen to take advantage of the favorable rate environment. In addition, mortgage applications to purchase homes increased by 7% for the week, reflecting a 4% rise from the same week one year ago.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased slightly to 6.67%, down from 6.73%. However, the points associated with these loans saw a minor increase, rising to 0.63 from 0.60. Joel Kan noted the consistency in declining rates, saying:
"Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate dropping to 6.67%, the lowest level since October 2024."
Government-backed mortgage activity also experienced an upswing. Government purchase applications rose by 11%, buoyed by a drop in the FHA rate to 6.34%. Kan highlighted the broader trends influencing homebuying activity:
"As we enter the spring homebuying season, activity was up across all loan categories. Government purchase applications experienced an 11% increase – helped by the FHA rate dropping to 6.34%. Additionally, average loan sizes were higher, with the purchase loan amount hitting $460,800, the highest in the survey dating back to 1990."
In terms of market dynamics, mortgage rates began the week relatively flat but experienced fluctuations over Monday and Tuesday. The imminent release of the monthly Consumer Price Index holds potential to influence rates further, potentially sending them in either direction.