Just last week for example, mortgage applications jumped by the most in 20 years! After accounting for the long Memorial Day weekend, they indeed jumped to their highest level in more than a month. Joel Kan, vice president and deputy chief economist at MBA, noted that this spike serves as a microcosm of the mortgage market overall.
According to the most recent data from the Mortgage Bankers Association, overall mortgage application volume increased 12.5% week-over-week on a seasonally adjusted basis. A 10% increase in home purchase applications led the way on this jump. Now, those applications are 20% above that same week last year. Applications to refinance a loan jumped 16%. That’s a hefty 28% increase from the same week in 2022.
Even with these positive trends, mortgage interest rates surprisingly stayed stable. The effective rate on the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances—defined as $806,500 or less—is currently 6.93%. The cost of these loans fell a tad to 0.64 points from last week’s 0.66. This figure takes into account the origination fee for loans with at least 20% down payment.
“Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month,” said Kan. The good news is that mortgage interest rates have moderated a bit, enough to encourage a pick up in activity. Moreover, the number of homes for sale is increasing, exacerbating this movement.
The national averages for 15-year fixed loans fell marginally. This drop, combined with low-interest FHA loans, helped produce more favorable borrowing conditions for prospective homebuyers. According to Realtor.com, national housing supply is roughly 31 percent higher than a year ago. This increase provides buyers with greater flexibility as they navigate the competitive landscape of the housing market.
Kan remarked on the current state of the market, stating, “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.” It is a hopeful sentiment that highlights the determination of today’s homebuyers who are undauntedly chasing their fortunes in a previously elusive market.
Mortgage interest rates are hardly different from last week, at only 9 basis points lower than this time one year ago. The increase in application volumes is a sign that consumers are starting to return to the market in droves to buy homes and refinance their mortgages.