Mortgage demand jumped last week. It otherwise would not have hit a new, nearly one-month-high, as it’s mostly been due to the Labor Day holiday-adjusted numbers. According to the Mortgage Bankers Association (MBA), overall mortgage application volume rose 12.5% last week from the previous week on a seasonally adjusted basis. This increase illustrates a notable increase in refinancing applications as well as purchase applications.
Joel Kan, MBA’s vice president and deputy chief economist, commented on this trend. He said the increase in applications is a sign of a market adjusting quickly as homebuyers adapt to new realities.
“Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month,” – Joel Kan
The average contract interest rate for 30-year fixed-rate mortgages is now 6.93%. This rate is only for conforming loan balances, that is loans of $806,500 or less. This rate was pretty steady last week, barely budging at all. The points on these mortgages dipped just a tick to 0.64 from 0.66. This increase takes into account the new origination fee for a 20% down payment loan.
Purchase applications went up 1% while refinancing applications jumped 16% this week. They shot up 28% from the same week last year. This most recent spike is a positive sign that homeowners are looking to refinance to capitalize on today’s rates and savings. Home Mortgage Demand Mortgage applications for home purchases shot up by 10%. This represents an extraordinary 20% jump over the same week last year.
Kan commented on the broader landscape of the mortgage market, stating, “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.”
On top of these trends, average rates for 15-year fixed loans and FHA loans dipped slightly. In demographically cord-cutting Realtor.com’s estimation, the net availability of housing is extremely high. In fact, it’s currently 31% higher than where it stood at this time last year. It makes sense that with more supply, more buyers are inspired to file purchase applications. So the larger selection, buyers are to assert themselves and make their move.
With the housing market still recalibrating, these signs point to an interesting and opportunistic space for buyers and lenders alike. Relatively stable interest rates have spurred activity in the mortgage market. At the same time, the increasing inventory is making a big difference.