Potential buyers attend an open house of homes for sale in Larchmont, New York, USA on Sunday, January 22, 2023.
Tiffany Hagler-Gilder | Tiffany Hagler-Gilder Bloomberg | Getty Images
Potential homebuyers are responding to lower mortgage rates and an increased supply of homes for sale. That boosted mortgage demand last week as fewer consumers sought to refinance.
Total mortgage loan applications increased 2.8% from the previous week, according to the Mortgage Bankers Association’s Seasonally Adjusted Index. Additional adjustments have been made for the Thanksgiving holiday.
The average contract interest rate for a 30-year fixed-rate mortgage with qualifying loan balance ($766,550 or less) dropped from 6.86% to 6.69%, and points for a loan with 20% down dropped from 0.70 (including the origination fee) to 0.67 per payment. This is the lowest rate in more than a month.
Mortgage applications for home purchases rose 6% this week, the highest level since January. Applications were down 21% from the same week a year ago, but because Thanksgiving falls on a different week this year than last year, there may be some noise in the annual comparison.
“Recent buying activity continues to be strong, supported by lower interest rates and higher inventory levels, providing potential buyers with a competitive edge,” MBA economist Joel Kan said in a release. More options earlier this year.
Applications for home loan refinancing fell 1% this week and were down 7% from a year ago. Today, most borrowers are getting loans at far lower interest rates than are currently being offered.
“Conventional refinance applications were down despite lower rates, but FHA and VA refinances rebounded from a week ago,” Kan added.
Mortgage rates continued to fall from the start of the week, but nothing dramatic. On Tuesday afternoon, investors were weighing geopolitical headlines from France and South Korea as well as positive comments on the economy from several Fed speakers.
More market-moving economic data will be released on Wednesday, including the ADP employment report and the ISM services index. Federal Reserve Chairman Powell will also attend the New York Times DealBook Summit to moderate the discussion.
