Mortgage applications rose for the first time in six weeks last week, according to the Association of Mortgages, despite a rise in interest rates.
Abrupt price swings and uncertainty about the general direction of the housing market are likely to play a role.
The average contract rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) rose to 6.25% from 6.01%, with points falling to 0.71 from 0.76 (including the origination fee) for loans with a 20% discount payment.
“Government bond yields continued to rise last week in anticipation of the Federal Reserve meeting in September, where they are expected to announce — in their efforts to slow inflation — another significant rate hike in the near term,” said Joel Kan, an MBA economist. , in an edition.
Home loan refinancing applications, which are typically very sensitive to large interest rate movements, actually rose 10% by the week, although they were still 83% lower than the same week a year ago. Some of that may have been due to last week’s holiday adjustment. It could also be that the few borrowers left who could take advantage of a refinancing eventually came off the fence, as rates could soar even higher in the near future.
“The weekly increase in applications, despite higher rates, underscores the overall volatility at the moment, as well as the Labor Day-adjusted results the week before,” Kan said.
Home purchase mortgage applications were up 1% for the week but were down 30% from the same week a year ago. Buyers now see less competition in today’s expensive market, so some may jump in if they have the chance. Homes have been on the market longer and sellers are much more willing to negotiate than even three months ago.
Still, prices haven’t really fallen much yet, and with rates as high as they are now, affordability is historically weak. The small weekly increase in mortgage demand doesn’t really represent the sharp correction underway in home buying.
Mortgage rates shot even higher this week, according to a separate survey from Mortgage News Daily. It showed the average rate on the 30-year fixed rate on Tuesday just below 6.5%, ahead of the much-anticipated Federal Reserve meeting on Wednesday. Investors will pay particular attention to commentary, not on a current rate hike, but on what lies ahead.
“The forecasts will amplify the volatility we have already seen with the rate hike decision. In addition, [Fed Chairman Jerome] Powell’s press conference always has the potential to add additional volatility,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.