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Mortgage applications on the rise

A rate hike from the Federal Reserve awakened mortgage demand from its month-long slumber.

Loan application volume rose 1.2 percent in the week ending on July 29, according to the Mortgage Bankers Association’s index measuring mortgages. It was the first increase in demand in five weeks.

Mortgage demand hit its lowest point of the 21st century multiple times in recent weeks. Demand rebounded slightly towards the middle of June, but has been plummeting since.

The benchmark rate hike from the Fed is being cited as a reason for the increase in demand, as mortgage rates bucked conventional wisdom and dropped after last week’s central bank decision. The average 30-year fixed rate for conventional loans was 5.43 percent last week, down from 5.74 percent the previous week; it was the biggest rate drop since 2020.

Factors beyond the central bank include inflation, unemployment, job claims, and supply and demand.

MBA associate vice president Joel Kan tempered any excitement about the rise in demand, noting activity still isn’t where it was last year.

“The drop in rates led to increases in both refinance and purchase applications, but compared to a year ago, activity is still depressed,” Kan said in a statement.

MBA’s refinancing and purchasing indices also made marginal gains last week. The refinance index rose 2 percent from the previous week but still came in down 82 percent year over year. The purchase index, which tracks mortgage applications to buy homes, increased 1 percent from the previous week.

Points rose from 0.61 to 0.65 (including the origination fee) for loans with a 20 percent down payment.

The share of applications through the FHA decreased from 12.1 percent to 11.9 percent week over week, showing a slight drop in buyers interested in making a small down payment. The share of Veterans Administration applications increased from 10.6 percent to 10.8 percent, while the USDA share of applications remained at 0.6 percent.

Kan sees the potential for sunnier days on the horizon in the mortgage market, especially if inventory finally starts to recover.

“Lower mortgage rates, combined with signs of more inventory coming to the market, could lead to a rebound in purchase activity,” Kan saiD

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  • Last week was the first overall increase in weekly mortgage applications since the end of February.
  • Applications to refinance a home loan jumped 10% for the week, but were still 23% lower a year ago, the Mortgage Bankers Association said.
A sharp drop in mortgage interest rates sent homeowners and potential homebuyers to their mortgage lenders.

Total mortgage application volume surged 8.6% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That is the first overall increase in weekly applications since the end of February.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.20% from 3.27%, with points increasing to 0.36 from 0.33 (including origination fee) for loans with a 20% down payment. That rate was 25 basis points higher a year ago.

Homeowners reacted swiftly to the potential savings. Applications to refinance a home loan jumped 10% for the week, but were still 23% lower than a year ago. The refinance share of mortgage activity increased to 60% of total applications from 59.2% the previous week.

Source: CNBC 

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 Boston Real Estate: Mortgage applications on the rise even with COVID-19 and the hurricane season.
  • Mortgage applications to purchase a home rose 3% last week from the previous week and were a stunning 40% higher from a year ago, according to the Mortgage Bankers Association.
  • The year-on-year comparison is usually in single digits.
A real estate agent shows a home to a prospective buyer in Miami.
Getty Images

The end of August usually marks the beginning of the slow season for housing, but as with everything else, this year’s trends are like no other.

Mortgage applications to purchase a home rose 3% last week from the previous week and were a stunning 40% higher from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index. The year-on-year comparison is usually in single digits. While it may have been skewed slightly by the Labor Day holiday, which fell earlier last year, purchase demand is still running significantly higher than a year ago.

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