Executive Summary
- Mortgage applications to purchase a home rose 6% for the week, hitting their highest point since September.
- The average interest rate for a 30-year fixed-rate mortgage increased slightly to 6.34% from 6.31%.
- Purchase application volume was 31% higher than the same week one year ago.
- Refinance demand decreased by 3% for the week but remained 147% higher than the previous year.
Mortgage applications for home purchases increased by 6% last week, reaching their highest level since September, according to the Mortgage Bankers Association’s seasonally adjusted index. This rise in demand occurred despite a slight increase in mortgage rates, with the total volume of purchase applications now standing 31% higher than the same week one year ago.
The average contract interest rate for a 30-year fixed-rate mortgage with a conforming loan balance ($806,500 or less) climbed to 6.34% from 6.31%. Points also increased to 0.62 from 0.58 for loans with a 20% down payment. Despite the weekly rise, the current rate remains 52 basis points lower than it was during the same period last year.
According to Joel Kan, an MBA economist, the increase in activity suggests that potential homebuyers are actively searching for opportunities as the market shifts. “Purchase applications for conventional, FHA, and VA loans increased, as potential homebuyers continue to shop around, particularly in markets where inventory has increased and sales price growth has slowed,” Kan stated.
While purchase demand saw a weekly gain, refinancing activity slowed. Applications to refinance a home loan dropped 3% for the week. However, due to significantly lower rates compared to the previous year, refinance volume was still 147% higher than the same week one year ago. Kan noted that “higher mortgage rates did quell some refinance activity, as conventional and VA refinance applications declined over the week.”
Market Outlook
As the housing market enters its traditionally slower season, this recent surge in buyer activity may reflect a response to moderating home prices and increased housing supply. Market observers are also monitoring external factors, such as the potential end of the government shutdown, which could influence interest rate movements in the coming weeks.
