Overall mortgage demand climbed to the highest level since mid August. That’s a big jump considering the seasonal adjustments done after Memorial Day weekend. The Mortgage Bankers Association (MBA) reported a notable increase in applications for both refinancing and home purchases, signaling a potential shift in the housing market.
Joel Kan, the MBA’s vice president and deputy chief economist noted that with the average contract interest rate for 30-year fixed-rate mortgages hovering at 6.93%. This interest rate is only available on conforming loan balances of $806,500 or less. He highlighted the rising demand, stating, “Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month.”
None-excluding the evil twin, 30-year fix-rates-amount of points slipped a tad to 0.64 from 0.66. This decrease calculation takes into account the origination fee for loans with a 20% down payment. While interest rates were only up a basis point or two, applications to refinance jumped 16% this week. This further trend just underscores that fact that today, homeowners would welcome the chance to modify their mortgage. Refinance applications were up 28% from the same week last year.
Beyond just refinancing, home purchase applications saw a historic spike as well. The data in the report was largely positive, reflecting a 10% increase in overall purchase applications from the previous week. Furthermore, this is an amazing 20% jump from the same week last year. Index of mortgage application activity overall, total mortgage application volume increased 12.5% last week from the week earlier.
Kan emphasized the broader implications of these trends: “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.” On the demand side, buyers are gaining confidence in a more favorable market. Notice that supply has increased by roughly 31% versus the same time last year, based on data from Realtor.com.
In the past week, mortgage interest rates have moved sideways again. Here’s what to watch for this week. All eyes will be on new monthly inflation figures, scheduled for release on Wednesday. Dividend news with the ongoing trade talks with China weighing on uncertain economic conditions and consumer confidence are sure to keep the housing market an ever-changing landscape.