- A slight increase in mortgage rates did not deter borrowers, especially since rates are still historically low.
- Mortgage applications to purchase a home rose 2% for the week but were still 18% lower than one year ago.
After falling steadily for a month, demand for mortgages to purchase a home rose slightly last week.
Coupled with a continued increase in refinancing, total mortgage application volume rose 2.8% for the week, according to the Mortgage Bankers Association's seasonally adjusted index.
Mortgage applications to purchase a home rose 2% for the week but were still 18% lower than a year ago. Buyers are contending with high prices and limited supply, although more residences are slowly coming onto the market. The type of loan now seeing higher demand is telling.
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"The higher level of purchase activity last week was driven by more government purchase applications, including a 3.3% increase in FHA loans," said Joel Kan, an MBA economist. "With low for-sale inventory keeping home price appreciation in many markets at record highs, the jump in FHA purchase applications is potentially a sign that more first-time buyers are finding purchase options despite the high prices."
A slight increase in mortgage rates did not deter borrowers, especially since rates are still historically low. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 2.99% from 2.97%, with points decreasing to 0.30 from 0.33 (including the origination fee) for loans with a 20% down payment.
Applications to refinance a home loan increased 3% for the week but were 8% lower than one year ago. The refinance share of mortgage activity increased to 68% of total applications from 67.6% the previous week.
"Homeowners continue to respond to lower rates, with refinance activity climbing to the highest level since February 2021," Kan said.