Mortgage applications turned around after four weeks of declines as rates dipped slightly.
The Mortgage Bankers Association’s weekly survey shows the adjusted Market Composite Index – a measure of mortgage loan application volume – increased by 7.2%.
Adjusted purchase applications rose by 8%, while the unadjusted index was up 17% from the week before and 27% lower YOY.
The average interest rate for 30-year fixed loans fell for a second week from 6.81% to 6.77%.
Though it’s not a huge drop, any dip will pull some rate-sensitive buyers off the sidelines.
“Rates that are still more than a percentage point higher than a year ago, and low for-sale inventory continue to constrain homebuying activity in many markets. The average loan size on a purchase loan decreased for the third straight week, as we continue to see more first-time homebuyer activity in the purchase market,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
First-time homebuyers are conscious of market pressures, and many are specifically looking for lower-priced properties. But the majority feel that homeownership is a good long-term investment and are optimistic about their ability to buy even in the current market.
Rising expenses seem to have played a major role in pushing these buyers into the market. Rent prices were a big reason respondents to a recent survey decided to forge ahead with homeownership despite rates and high home prices.
Refinances also saw improvement, up 6% from the week prior. They remain 41% lower than the same time last year, comprising only 27.3% of total applications. In the past decade, refis averaged 58% of total activity.
“Refinance applications accounted for less than a third of all applications and remained more than 40 percent behind last year’s pace,” Kan said.
“Elevated rates have reduced the benefit of a rate/term refinance for many borrowers and continue to discourage cash-out refinances as borrowers are unwilling to give up their lower rates.”
The FHA share of total applications fell from 13.2% to 13%, with an average interest rate of 6.70%. The VA share increased to 12.6% from 12.5%, and the USDA share fell from 0.5% to 0.4%.
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