While last week’s interest rates did an unexpected turnaround, it doesn’t seem to be slowing down interested prospective homebuyers. Hungry real estate shoppers helped to offset the slightly lower numbers of potential homebuyers wanting to refinance. Mortgage applications remained at a somewhat standstill this week with a light dip of 0.1%, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week.
Home loan applications to refinance fell by 4% but were nearly 150% higher this year. Meanwhile, mortgage applications to buy a home went up by 6%, leading to an overall annual increase of 15%. What caused the spike? Potential property shoppers are recently coming back to the market even though the supply of homes are far from meeting market demand. Last year, many homebuyers opted not to buy properties thanks to increased interest rates and higher prices, so some of that buying interest is returning now.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.01 percent from 3.82 percent, with points decreasing to 0.37 from 0.44 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week but is the highest numbers in the past two months but still down 87 basis points, in comparsion to last year.
“The jump in U.S. Treasury rates at the end of last week caused mortgage rates to increase across the board, with the 30-year fixed-rate mortgage climbing to 4.01 percent – the highest in seven weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinancing activity dropped as a result, driven solely by conventional refinances.”
Mortgage applications to buy a freshly constructed, brand new home shot up by 33% this year according to another report by the Mortgage Bankers Association.
It seems mortgage demand from home buyers are jumping, despite interest rates spike.