Mortgage demand has hit its highest level since August. This jump occurs as the industry is faring well with a significant recent surge in inbound applications after the Memorial Day weekend. According to the Mortgage Bankers Association (MBA), total mortgage application volume surged 12.5% over the previous week. This increase represents a major reversal from last week. This jump is due to an increase in both refinancing and home purchase applications.
According to Joel Kan, MBA’s vice president and deputy chief economist, this change should not be underestimated. He stated, “Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month.” Homebuyers and those looking for a deal are reentering the field in a market of rising stock. This significant increase in activity comes in the face of continuing economic uncertainty.
The still high average contract interest rate on 30-year fixed-rate mortgages now stands at 6.93%. This high rate only applies to conforming loan balances – defined as $806,500 or less. That indeed marks a brief stepping away from the precipice as mortgage interest rates were essentially unchanged last week. Fees for these loans fell to 0.64 from 0.66. Even with this drop, a $400,000 loan with a typical 20% down payment still has a 1.236% origination fee.
That’s because refinancing applications jumped an astounding 16% this week. They are on average still 28% higher than the same week last year. This rush is credited to would be movers wanting to capitalize on today’s short-term market conditions and find lower mortgage rates.
Applications for home purchase also increased by 10% over the same time. Kan remarked on the market dynamics, saying, “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.” That puts the year-over-year gain in purchase applications at 20% above where it was this same week last year.
The overall mortgage picture is hottttt!! According to Realtor.com, the national supply is up approximately 31% from this time last year. It shows that refinance and purchase applications are both going in the right direction. At the same time, average rates for 15-year fixed loans and FHA loans have fallen enough to boost refinancers’ and buyers’ incentive.