Mortgage applications just hit their highest level in more than a month. That increase was largely due to an even bigger increase in refinancing activity and home purchase application volume. According to the Mortgage Bankers Association (MBA), overall mortgage application volume jumped by 12.5% last week. This substantial uptick is a testament to the robust demand for, and importance of, today’s fiercely competitive market.
Joel Kan, MBA’s vice president and deputy chief economist, pointed out that this increase comes after the traditional spring uptick that occurs after the Memorial Day holiday. He stated, “Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month.”
The 30-year fixed-rate mortgage averaged 6.93% with 0.56 points and fees. This is on conforming loan balances of $806,500 or lower. Partly as a result, mortgage interest rates were little changed last week, keeping this figure relatively flat. In truth, this was an overall decrease of just 9 basis points from this time a year ago.
FICO scores on accepted applications for 30-year fixed-rate mortgages saw a small decline. Measured this way—including the origination fee, in the case of a 20% down-payment loan—they fell from 0.66 to 0.64. This $8,000 reduction probably had the effect of increasing interest among would-be homebuyers, to be sure. It appealed to borrowers who wanted to refinance their current loans.
Purchase applications decreased by 4% from last week, while refinancing applications took off by 16% this week. From the same week last year, they were up an incredible 28%. That increase is a positive sign that homeowners are taking advantage of chances to reduce their mortgage payments while interest rates remain steady.
Applications for both the purchase of a home and refinancing rose by 10% week-over-week. Relative to this time last year, they are now over 20% higher. Kan remarked on the current market dynamics, saying, “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.”
This latest spike reflects Realtor.com data indicating that housing market supply has increased roughly 31% year-over-year. This increase means more options and a wider variety of homes to choose from for prospective buyers. Improved inventory is a key factor in restoring buyer confidence. It makes it possible for more people to realize their dream of homeownership.
Plus, new monthly inflation data comes out this Wednesday. This is new and important information that is likely to change the market’s expectations for future mortgage rates and mortgage application activity. Continued trade negotiations with China may affect broader economic conditions that influence housing demand and financial markets.