A ‘For Sale’ sign is posted in front of a single-family home on October 27, 2022 in Hollywood, Florida.
Joe Riddle | Getty Images
Mortgage rates continued to fall last week, and current homeowners and potential homebuyers reacted quickly.
According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume, including refinance and home purchase loans, rose 7.4 percent last week from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance ($726,200 or less) decreased from 6.19% to 6.18%, 0.65 points for loans with 20% down (including principal fees). It fell to 0.64. The payment rate was 3.83 percent in the same week a year ago.
With rates at their lowest level since early September, refinance demand rose 18% week-over-week but was still down 75% from the same week a year ago. The refinance share of mortgage activity rose to 33.9 percent of total applications from 31.2 percent last week.
Home mortgage applications rose 3% for the week and were down 37% from the same week a year ago.
“Purchasing activity that was halted last year by a sharp rate hike is slowly returning as rate easing and housing demand remain strong, driven by supportive demographics and continued strength in the job market,” said Joel Kahn, an MBA economist.
Kahn added that the average loan size on a purchase application increased to $428,500, the largest average since May 2022.
“This increase is a sign that the recent uptick in purchase activity is trending toward larger loan sizes and less first-time homebuyer activity, as the supply of entry-level homes is low, and buyers are moving into many markets. I’m struggling with laziness,” Kahn said.
After an unexpectedly strong jobs report on Friday and comments from Federal Reserve Chair Jerome Powell on Tuesday that the central bank may continue to raise interest rates, mortgage rates rose dramatically to start the week. But came back.
“The reality is we’re going to react to the data,” Powell said. “So if we continue to get, for example, strong labor market reports or high inflation reports, it could be that we’ve done too much and over-inflated prices. “
According to a separate survey by Mortgage News Daily, the average 30-year fixed rate rose about half a percentage point last Thursday through Tuesday.
Read full article here