Mortgage demand rises to the highest level in over a month, after holiday adjustment
Mortgage interest rates barely moved at all last week, but demand from homebuyers as well as those looking to refinance a current home loan increased.
Total mortgage application volume rose 12.5% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. An additional adjustment was made for the Memorial Day holiday. While the weekly move may seem large, the volume is still quite low historically.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, increased to 6.93% from 6.92%, with points decreasing to 0.64 from 0.66, including the origination fee, for loans with a 20% down payment. The rate is now just 9 basis points lower than it was the same week one year ago.
The average rates for 15-year fixed loans as well as FHA loans, however, decreased slightly.
"Coming out of the Memorial Day holiday, mortgage applications increased to the highest level in over a month," said Joel Kan, MBA's vice president and deputy chief economist in a release. "Treasury rates saw some movement during the week, which resulted in additional opportunities for borrowers."
Applications to refinance rose 16% for the week and were 28% higher than the same week one year ago.
Applications for a mortgage to purchase a home rose 10% for the week and were 20% higher than the same week ago. Much of that may be due simply to the increase in available listings. Supply is now about 31% higher than it was at this time last year, according to Realtor.com. Home prices are also starting to ease.
"Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets," Kan added.
Rates haven't moved much at all this week, but new monthly data on inflation is set to be released Wednesday, and trade talks with China are still ongoing. Either or both could be enough to move the bond markets, although rates have moved in a very narrow range for the past few months.
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