Mortgage demand shoots up to its highest point in more than a month. The tide is driven by an unprecedented number of applicants that followed the Memorial Day holiday. The Mortgage Bankers Association (MBA) reported a 12.5% rise in total mortgage application volume last week compared to the previous week. This increase is a direct result of increasing homebuyer and refinance interest in the current market.
Joel Kan, the MBA’s vice president and deputy chief economist, pointed to that dynamic in describing the recent trend in mortgage applications. He stated, “Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month.” This week’s data from the Mortgage Bankers Association indicates that the average contract interest rate for 30-year fixed-rate mortgages has climbed to 6.93%. Of course this only applies to conforming loan balances of $806,500 or less.
The average fee of 30-year fixed-rate mortgages has dropped from 0.66 to 0.64 points. This significant drop, including the origination fee for loans with a 20% down payment, has played a large role in that surge. Perhaps most interestingly, applications to refinance jumped by 16% just in the past week. Year-over-year, refinancing applications are up just 28% from the same week last year.
Beyond just refinancing, applications to buy homes have shot up to their highest in nearly three months, up 10% week-over-week. The MBA’s data rounds out a picture that includes indications that purchase applications are surging. Today, they’re 20% higher than they were this time last year. Realtor.com recently reported that housing supply increased by nearly 31% from this time last year. This new, widespread availability has created strong, pent-up demand among potential homebuyers.
Even with these promising trends, mortgage interest rates continue to hold steady in a narrow range in the last week. That new reduced rate is still only 9 basis points lower than it was this week last year. Market observers are awaiting new monthly data on inflation set to be released on Wednesday, which could further influence mortgage rates and buyer sentiment.
Kan also addressed the broader economic landscape, stating, “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.” While volatile trade discussions with China are inhibiting growth on the international front, many prospective buyers seem undeterred, keeping actively searching in a changing housing landscape.