Mortgage applications recently jumped the most on record. So said the Mortgage Bankers Association (MBA), who reported today that they’ve hit their highest level in more than a month. This new increase builds on an increase due to a reconciliation for the Memorial Day holiday. Mortgage application volume increased a whopping 12.5% from last week. This increase reflects the overall growth in the housing market, which is great news!
This increase is important,” said Joel Kan, MBA’s vice president and deputy chief economist. He noted that “coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month.” This jump is largely due to a 10% spike in applications for home purchases. Important to note, refinance applications surged by a huge 16% this week.
The most recent average contract interest rate for 30-year fixed-rate mortgages is 6.93%. This goes for conforming loan balances as well, which are loans of $806,500 or less. This commits us to this rate, which has hardly budged in the past week. The average points for these mortgages fell to 0.64, a decrease from 0.66. This amount assumes an origination fee as well, for loans with a 20% down payment.
Applications for refinancing are especially striking — up 28% from the same week one year ago. This uptick suggests that many homeowners are taking advantage of current rates and market conditions to refinance their existing loans.
While the refinance surge is certainly eye-popping, demand for home purchases got a huge lift with application volume up 20% over the same week last year. This is a testament to the increasing preference of homebuyers towards walkable suburban environments, even in the face of potential recession. Kan stated, “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.”
The marginal dip in 15-year fixed loan and FHA loan average rates only adds to existing borrower-friendly trends. Already, according to Realtor.com, housing supply has jumped nearly 31% from this time last year. This boost makes it easier for more buyers, including first-time homebuyers, to enter the market.
The average mortgage interest rate is 9 basis points lower than at this time last year. Having such stability gives you the impression of a pretty stable market. Both refinancing and purchase applications are on the rise. Industry experts are hopeful that there is still room for growth, particularly when it comes to the overall size of the mortgage market.