Mortgage applications rose last week despite rates jumping to their highest point in more than a month.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 3.7%, changing course after last week’s 8.8% decrease.
Adjusted purchase applications rose by 5%, while the unadjusted index was up 6% from the week before and 28% lower YOY.
The average interest rate for 30-year fixed loans jumped from 6.43% to 6.55%, a second week of increases and the highest level in more than a month.
“Both conventional and government home purchase applications increased last week. However, activity was still nearly 28% below last year’s pace, as high mortgage rates and low supply have slowed the market this year, even as home-price growth has decelerated in many markets across the country,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Although incoming data points to a slowdown in the U.S. economy, markets continue to expect that the Fed will raise short-term rates at its next meeting, which have pushed Treasury yields somewhat higher.”
Analysts expect that the Federal Reserve will raise interest rates by 25 bps in its May meeting.
“Although forecasts are mixed, so far the Federal Reserve seems focused on its inflation-reduction targets, which suggests that interest rates may remain elevated, at least in the near term,” Craig J. Lazzara, Managing Director at S&P DJI, said.
“Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.”
Refinances also saw a boost, up 2% from the week prior. They remain 51% lower than the same time last year, comprising only 26.8% of total applications. In the past decade, refis averaged 58% of total activity.
Other key findings include:
-The FHA share of total applications fell from 12.7% to 12.6% with an average interest rate of 6.41%.
-The VA share dropped to 11.2% from 11.7%, and the USDA share fell from 0.5% to 0.4%.
–ARMs accounted for 6.7% of applications,an increase, and the rates for these loans dropped from 5.56% to 5.47%
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