Applications for Mortgages Jump
Mortgage applications surged as rates fell across the board. Fixed income vehicles including treasury bills and bonds, corporate bonds, guaranteed investment certificates, etc. all declined, as did mortgage rates. As inflation declines, so do the above rates.
The 30-year mortgage rate averaged its lowest level in three weeks. The dip in mortgage rates served as a boost to potential homebuyers (and refinancers).
According to the Mortgage Bankers Association (MBA), the market composite rate – a measure of mortgage application volume rose 10.4% for the week ending January 12, 2024. bringing the improved rate to 210.5 for the week. A year ago, this week, the rate was at 239.2.
The refinancing index increased led by those refinancing conventional mortgages. Applications to refinance a home loan jumped 11% from the previous week and rose 10% compared with the same week one year ago.
The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.75% for the week ending January 12. That’s down from 6.81% from the week before. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200) decreased to 6.86% from 6.98%, The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.24% from 6.4%,
The average rate for a 30-year mortgage backed by the Federal Housing Administration was down to 6.46% from 6.56%.
The home buying market is heating up as rates fall. Lower rates will not only bring buyers back into the market, but they’ll also serve to lure homeowners with low interest rates who otherwise would be unwilling to sell, rethink their plans.
If rates continue to fall, the gap between housing demand and supply will be more evenly marched. But until then home prices continue to rise.
“Although purchase activity is lagging year-ago levels, refinance applications have improved from their recent low point and have been showing year-over-year gains, albeit at low levels,” Joel Kan, vice president and deputy chief economist at the MBA, said in a statement. Kan added, “If rates continue to ease, MBA is cautiously optimistic that home purchases will pick up in the coming months,” he added.
The MBA survey is considered very reliable, as it covers more than 75% of all U.S. mortgage applications.