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Mortgage rates dropped last week, and homebuyers are jumping the fence. This resulted in overall mortgage demand rising 6.3% from the previous week, according to the seasonally adjusted Mortgage Bankers Association index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) fell to 6.86% from 6.90%, with scores remaining unchanged at 0.70, including origination fees, for loans with a down payment. By 20%. .
While the drop in interest rates wasn't exactly huge, there was a fair amount of pent-up demand among homebuyers. Some were waiting until after the election, others for lower prices, others for more supply. It's all done now.
Home mortgage applications rose 12% from the previous week and were 52% higher than the same week a year ago. Last year at this time mortgage rates were higher, but they are falling. However, the supply of homes for sale was very limited. It has improved significantly this year.
“With growth in for-sale inventory and signs that the economy remains strong, buyers have remained in the market despite recent price hikes. The increase in traditional purchase orders helped push the average purchase loan size to $439,200, its highest level in “Almost a month,” Joel Kahn, an economist with an MBA, said in a press release.
Home loan refinancing applications fell 3% during the week but were 119% higher than the same week one year ago.
But these annual comparisons are flawed.
“The decline in refinancing activity was driven by declines in FHA and VA refinancings. Applications were significantly higher than a year ago by most metrics, but this was compared to the week of Thanksgiving 2023, which was a week before the holiday this year.” ” Kahn noted.
Mortgage rates started this week slightly lower but could take a bigger step following the release of economic data on Wednesday. Holiday weeks tend to be volatile for markets in general, especially bond markets.
“There could be some random trading in either direction on Thanksgiving week due to the unique market conditions created by the severely shortened trading week,” Matthew Graham, chief operating officer of Mortgage News Daily, wrote.
