Mortgage Demand Surges as Rates Fall and Inventory Rises
The housing market is showing signs of life, driven by declining mortgage rates and an increase in available homes for sale. According to the latest data from the Mortgage Bankers Association, total mortgage application volume rose 2.8% compared to the previous week, with a notable surge in purchase applications.
Purchase Applications Reach Highest Level Since January
Applications for mortgages to purchase a home jumped 6% for the week, reaching their highest level since January. This upward trend is attributed to lower rates and a greater selection of homes for buyers to choose from. While applications are still 21% lower than the same week last year, the annual comparison is somewhat skewed due to the timing of the Thanksgiving holiday.
Refinancing Activity Slows
On the other hand, applications to refinance a home loan fell 1% for the week and were 7% lower than one year ago. This decline is largely due to the fact that many borrowers already have loans with rates lower than those currently available.
Rates Continue to Fall
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.69%, the lowest rate in over a month. Points also decreased to 0.67 from 0.70, making it an attractive time for buyers to enter the market.
Economic Data and Fed Commentary in Focus
As the week progresses, investors will be keeping a close eye on economic data releases, including the ADP Employment Report and ISM Services Index. Federal Reserve Chairman Powell’s appearance at the New York Times DealBook Summit is also expected to influence market sentiment.
A Shift in the Housing Market
The recent strength in purchase activity suggests a shift in the housing market, driven by lower rates and higher inventory levels. As the market continues to evolve, it will be important to monitor these trends and their impact on the broader economy.
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