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Houses in the North Park neighborhood of San Diego, California.
Bing Guan | Bloomberg | Getty Images
After declining steadily for a month, the demand for mortgages to buy a home edged up last week.
Coupled with a continued increase in refinances, total mortgage application volume rose 2.8% for the week, according to the Mortgage Bankers Association’s seasonally adjusted index.
Mortgage applications for the purchase of a home rose 2% for the week, but were still 18% lower than a year ago. Buyers are grappling with high prices and limited supply, although more homes are slowly entering the market. The type of loan that is currently experiencing higher demand is revealing.
“The higher level of purchasing activity last week was driven by a greater number of government purchasing requests, including a 3.3% increase in FHA loans,” said Joel Kan, MBA economist. “With low inventory for sale now appreciating home prices in many markets to record highs, the increase in FHA purchase requests is potentially a sign that more first-time buyers are finding purchase options despite high prices. “
A slight increase in mortgage rates has not deterred borrowers, especially since rates are still historically low. The average contractual interest rate for 30-year fixed rate mortgages with compliant loan balances ($ 548,250 or less) decreased from 2.97% to 2.99%, with points dropping from 0. 33 to 0.30 (including origination fee) for loans with a 20% drop in payment.
Mortgage refinancing requests increased 3% on the week, but are down 8% from a year ago. The refinancing share of mortgage activity rose to 68% of total applications, from 67.6% the previous week.
“Homeowners continue to respond to lower rates, with refinancing activity reaching its highest level since February 2021,” Kan said.
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